I don't find it troubling either. At least not right away. It would be troubling if 1) Google uses unfair means to increase it’s dominance. If company produces a great product and everyone flock to it, you can’t really bitch that. 2) If Google uses it’s dominance in search market to shut out competition in other market.
If Google becomes the only game in town for search, their ad rates will rise simply because advertisers won't have another outlet for search advertising. Likewise, ad rates at Yahoo are suffering today since the mindset is always to advertise on Google and the greater competition in Google's ad auctions make their pricing a lot higher. Personally, I find it a good reason not to run ads on Google (since it's cheaper for the same thing), but if Google's dominance keeps going up, it's going to cause problems.
So, even if Google does nothing, by getting to a certain size (compared to the overall size of the market), it causes problems. Of course, I'd much rather Google in that position than Microsoft <<shudder>>.
I don't begrudge Google either - they've acted as good corporate citizens offering a wonderful service. However, even if you're good and doing nothing wrong doesn't mean that problems don't arise.
This is a bad thing, because it allows Google to leech the value out of search traffic that is created by publishers. Jakob Nielsen wrote an article explaining this:
http://www.useit.com/alertbox/search_engines.html
The web gets hurt when Google sucks so much value out of search traffic that publishers don't have the economic incentive to keep adding value to the web.