However: File sync strikes me as a lot closer to email than <insert failed acquisition here>.
Additionally, it seems logical to build/ship GDrive right into android.
I say again: I'd worry like hell.
You're second point sounds right. But to me, Dropbox has always been about the UX and convenience rather than the cost / space.
I think it will be interesting to see what Google launches.
[1] See this slide for CEO Drew Houston's humorous take on this: http://www.slideshare.net/gueste94e4c/dropbox-startup-lesson...
Does GDrive do that? Not yet.
Yes, especially in a market where there are many, many users of computers who might have occasion to share files who have not used (or even heard of) any of the available file-sharing solutions yet. I am a sporadic user of Dropbox strictly for back-up of documents I produce, and a moderately frequent user of Google Docs for collaborative editing who knows a lot of other Google Docs users. I could see Google making huge gains in market share, turning it into tomorrow's "first mover" from the point of view of most users, for a file-sharing service.
Then I started using it for sharing. Man, it's magic - I've never had it be so painless to share things. I can put a folder in my dropbox, share it to a few emails, and then everyone just has it later in the day. Man, that's cool. I can also create unlimited of those folders easily to control who gets what documents/files. It's a bloody miracle, Dropbox is. The backup feature is really second fiddle to sharing, it's just to make it useful enough for you to try it before you need to share, so that you discover sharing and fall in love with the product.
They have specific brand momentum (where Google's momentum is not specific to the product) which counts for a lot when dealing with the general public.
I wouldn't worry like hell. Though I would worry a healthy amount: I'd keeping a very close eye on how this pans out, and would re-double efforts to make sure I didn't fall behind on product development, quality and support.
You can add Google Navigation and Google Voice to the list of successful products that match that description.
I think GDrive will help DropBox more by offloading their freeriders to Google. People seeking a better premium experience (and less risk of say losing all their GDrive contents because their Google+ got suspended) will likely find DropBox appealing once they realize the convenience of a service like this.