Does Googles new privacy policy mean you're being watched more?

• Maybe you use a shared family computer and always leave YOUR gmail logged in so all search activity is then related to your gmail account.
• Maybe yours life style is erratic as you move around a lot and have varied interests and don't want these to effect your search results.
• Maybe you just don't like the idea that Google or anyone stores information about you.
• Maybe you are involved in illegal activities, although this seems irrelevant as Google isn't offering to remove data about you, it's just offering to not use it to direct advertising specifically and intelligently at you and to not combine it with data about you from other Google applications you use, saying that I'm not sure what the below article quite means by this "With Web History... ...disabled, they will be partially anonymized after 18 months".

Which ever is relevant or maybe none at all, this is interesting information on How to Remove Your Google Search History Before Google's New Privacy Policy Takes Effect.

Personally, I see this as more of an insight as to how Google works and am interested to see how it effects me as I use two browsers on my computer, one for work related activities (Firefox) and keep this logged in with my Google Apps account and another for personal activities (Chrome) and keep this logged in with my Gmail account. Wonder what results each browser (or Google login) will return when I search using the same terms?

I'd actually be interested in some real life examples why people wouldn't want their Google applications to share data if you choose to not disable the web history.