Google is shooting themselves in the foot if they leave. Eventually the censorship will be toned down (ask any Chinese adolescent for their opinion), and when this happens and Google decides to return they will be in a situation even worse than what Microsoft is facing now in the West. At least Microsoft has had some position in the marketplace, even if it has mostly been a failure. Google will have to start from scratch (again) though, and history suggests that the underdog search engines don't do very well.
Also, the overall trend appears to be towards more censorship and regulation on the Internet, not less. So Google will probably find in the future that the size of the market that it deems morally acceptable is increasingly limited.