Well Fecebook got a lot of folks to switch from Myspace, right? I don't use either service so I don't know what Facebook offered that Myspace didn't but you are right that Google will have to offer something compelling. They can't just offer a "me too" clone of Facebook, and I don't think a cosmetically better UI will really be enough either.
Before the Buzz debacle I would have thought that Google might compete on the issue of privacy, at least as one differentiator. I think they've lost the high ground on that however, and it should be obvious to anyone who thinks about how Google makes money that they have a huge temptation to mine your social graph for information that will help them target advertising to you.