It's not just what they collect with a single service. It's the amount of clarity that comes from a linkage with their other collected data sets.
> We don't correlate or combine information from our temporary or permanent logs with any personal information that you have provided Google for other services.
Of course, all of that is meaningless if you want to think that Google is lying in its privacy policies.
(Disclaimer: I work at Google, but not on 8888).
I'd say that depends on what definition of "personal" they're using.
"Personal information
This is information which you provide to us which personally identifies you, such as your name, email address or billing information, or other data which can be reasonably linked to such information by Google, such as information we associate with your Google account."
This is nice in theory but would prevent you from sharing your data with any third-party services in practice beyond your personal circle of trusted acquaintances.
If you're willing to believe that the service matches the published source code, why wouldn't you also be willing to believe that the service matches the published "specifications" (e.g. privacy policy)?