Today it's "sick forbidden sex with animals" but tomorrow it could be "your rights as a German" and if there's no transparency, the government can easily control the information that their people see. Which is a really big thing to control without any oversight or input.
To respond to your question: I default to trusting people. So in the grey area, I'm towards whatever side lets people decide their lives for themselves. But as to specifically where it starts and ends, that's not a specific call I'm informed enough to make. And I'm sure it differs from culture to culture. What's acceptable for my neighborhood is probably wrong for others. To me, that's where things get impossible to decide on one line for everyone. So I'd trust people to define their own community mores.
This is a very dificult and highly subjective topic. Free speech always ends where you start to hurt other people. So there is always 'censorship' in some way or another. The group of 'anti censorship' people (no censorship whatsoever) almost always neglect that point.
I think the only question is: how far should censorship go? Should we block sites? Should we block search engines (like in this case)? What material should be blocked? How can we make sure that the list of items that are censored does not 'overflow'?
That's easy. There should be no government mandated censorship.
First of all - because it doesn't work for the intended purpose. The Internet is so dynamic that no method of censorship can stop information from being disseminated. Your own children are all "safe" and protected, until a friend teaches them how to get passed that filter to view porn or whatever and your children will want to view porn, especially given a lack of education from parents. It's also a pretty dumb filter and governments are failing even at censoring PirateBay or WikiLeaks. Without proper supervision and education, it will just happen. Censoring extreme political views, or any political views that go against the system doesn't work either. It never did. Actually censorship helps in disseminating extreme political views and the only thing that helps is proper education.
Second of all, there are no lines to be drawn - what represents useful information for some people, may hurt the feelings of other people. Nobody is in a position to decide what information should be censored. And if I want to jerk off on people having sex with horses, why should anybody have a problem with that. Being tolerant of people that are different from us in one way or another is a lesson that the German people should have learned, otherwise we are bound to repeat the same mistakes over and over again.
I have no problem with censorship when done with full accountability and audit trail - iow. with an invididual court order per item censored. That way the party who demands censorhip has to make their claim and convince a (supposedly impartial) judge that the case is truly exceptional. There has to be a legal and valid reason!
The audit trail from court documents would then allow to see when the request was made, and when the censorship of the said item took place. Most importantly, it would enable the people demanding censorship to be held accountable for their actions. Named, always. Shamed, if necessary.
A censorship list compiled and distributed in private is ripe for abuses. There are always parties who would use such a system to further their own agenda. (Insert selection bias here.)