It seems a little strange because I'd assume mapping Vienna, one of the world's more well known cities, would be of high importance. I wonder if they're now avoiding Austria on purpose, simply to send a message.
Edit: It looks like the ban was lifted in 2011. Three years later, and there's still no street view in Austria. I'm scratching my head on this one.
I do not live in Austria, but, in my opinion, this does not seem an entirely unreasonable reaction to that discovery. (Incidentally, I think I would be in favor of laws controlling the massive untargeted acquisition of information in public space, for privacy reasons... and I would not mind at all if this meant there was no Street view coverage in my country; quite the contrary.)
A little perspective is nice.
(That said, a3_nm's post indicates that this case had more to do with Google's collection of private data over WiFi than the photographs themselves. It's hypocritical for governments in the age of Snowden to criticize a private company for doing that, but at least it's understandable.)