Everyone should read this official post on Google's recent decision to launch Google.cn. Their new search engine will conform to China's censorship laws. Not surprisingly, this has caused some controversy.
I think Google's explanation for their decision is reasonable. I am happy that I do not have to make these sorts of decisions. My gut reaction would probably be "screw you, Chinese government" and that's probably not helpful.
To the Google head honchos: your motto "don't be evil" is definitely NOT arrogant.