I think it's a very smart move for the long run. Personally, I would raise even more than the $4 billion currently contemplated. With a nearly $80 billion market cap and about $3 billion in cash on hand, Google is sitting pretty. Why does it need more money?
For starters, the stock is probably fully valued and getting some greenbacks in the bank is probably a very smart hedge against this aggressively bullish market. Granted, these 14 million new shares will depress the price but that should be only a blip in the overall picture. Does Google know about or see something in the advertising economy that we don't know about?
That may be one reason, but I also think the plan is to take over the world. They just bought Android, the mobile device software company. And, I suspect that they will continue to play toward owning the customer interface. Unlike Yahoo, it doesn't seem that Google wants to deal with content, rather they seem to be positioning to control the interface layer - the space above the operating system (where Microsoft and Symbian lie), but below the content network (where Reuters and Yahoo lie).
I guess, we'll just have to see.