People like Google and their free tools. But as with many freebies, there's a catch, and this particular catch is a gigantic security risk.
A new feature in Google Desktop lets you "search across computers," which means you can index your files once and then search for them from another computer.
As you'll see when you read their Google Desktop-related privacy policy, "If you choose to enable Search Across Computers, Google will securely transmit copies of your indexed files to Google Desktop servers, in order to provide the feature. Google treats the contents of your indexed files as personal information, in accordance with the Google Privacy Policy". -- the emphasis is mine.
That's just about all the justification needed by anybody who is serious about security to ban Google Desktop in a business environment. This also goes to show that you simply must read license agreements and privacy policies carefully before using anybody's software.
On a related note, if you need a really good desktop search engine then try dtSearch, which can index text, HTML, XML, Word and PDF documents, Outlook mailboxes, and a whole lot more. It's a very powerful tool.