This is as close of a demo of technology passing the Turing test as I have ever seen. Sure, it's not a fully free form conversation on any subject, but incredibly impressive nevertheless.
Oh yes, and the voice synthesis is just simply amazing. I don't think I'd be able to tell that I was talking to a bot either.
So far, it's been the most impressive Google I/O keynote that I've ever seen and it's not over yet.