The phone will be made by HTC and will be Google-branded. It will be sold unlocked and it will have a 1 GHz Snapdragon processor and an OLED screen. If TechCrunch's post from around a month ago is correct, it will be a device that uses VoIP for voice rather than the carrier's voice capabilities. This would likely be Gizmo5 if it is true, and in that case there's a good chance Google will start charging for the service.
If this device will actually be sold (and isn't just exclusively for Google employees), it could seriously change the balance of power in the mobile space. Right now, most mobile users seem to remain blissfully unaware of the existence of unlocked phones. Google has the power to change that. If the phone is cheap enough to be competitive with other (subsidized) smartphones, it could just make people consider unlocked phones as an option. Carriers now have more control than handset makers, but that could easily change. If people stop buying subsidized phones and the price of unlocked phones comes down, the carriers will actually have to make people like their service and their pricing. (What a concept!)
It's something I've thought about a lot lately since I've been looking at all sorts of phones and carriers. The major problem right now is that all the carriers (except maybe Sprint) charge extremely high amounts for family data plans with smartphones. If this can help bring prices down, I'm all for it.