University of Michigan president Mary Sue Coleman addressed the Association of American Publishers, explaining why the Google book project is a good thing.
Link found at John Batelle's Searchblog.
I completely agree that digitizing books and building a searchable database are useful.
As are translations, derivative works like movies or offering the full text in databases. The fact that something is useful doesn't mean you can do it without asking the copyright holders.
Update: One interesting point for the legal analysis is the question what the University of Michigan intends to do with the electronic data that Google hands them under the contract as consideration for giving Google access to the books. President Coleman noted that they don't expect to have students read electronic copies of the latest Harry Potter book in their dormitory rooms. Instead, the data will be locked away and treated with utmost care, like "highly infectious disease agents used in research".
If the university is planning on just locking the data away, what exactly is the point of having it in the first place?