Based on my casual observation of the situation, it seems to me the bad things about Google Buzz  [*] were the result of just a couple basic product design decisions that probably felt natural and ingenious to the product designers, based on their usage of Google products as a whole. Of course being Google employees, their usage likely differs significantly from other Gmail users, say nothing of their trust in the company as a whole.
While building software for yourself is a good idea, especially for small businesses or startups, it is dependent on you being a lot like your customers. Once you are building products for yourself inside a giant organization that internally looks a lot different than the outside world, that is when having empathy  for your actual customers becomes increasingly important. Especially when you have the resources to actually go and find out, scientifically, what your users are like.
Google is still just a search company, and that piece of their business and experience they get right every time. But they are also increasingly a product** company, and getting a lot of exposure through their products. I suspect that these products are primarily developed by (relatively) small teams of very smart people, whose intelligence has led to a certain self-assurance but whose myopic experience has led to a certain naiveté about how a product will be received in the "outside" world. Buzz feels a lot like Google's version of Clippy. Let's just hope Google is able to turn the user experience ship early and go back to creating products born out of novel innovations and not just internal versions of other company's products.
* There were a ton of intelligent critiques of Buzz and I hoped to link to a few more of my favorites, but I failed to preserve the links or re-find them in a cursory search. Although just now I found this well-written (if wordy) analysis that I think says the same things I just did but in a more business-like, thought out way.
** Their search engine and results presentation is also a product, but for the purposes of this discussion I've categorized it separately.
Postscript: FWIW, I disabled Buzz after about 15 minutes of testing. Had there been a setting to keep it out of my inbox without having to create a filter I might have tried it for a day or two, but the email inbox is sacred, and their intrusion into it was enough of an offense for me to make a quick and final judgement in terms of my own usage of the product.