From the Google Code site:
Google works directly with the key
  stake holders for each library effort
  and accepts the latest stable versions
  as they are released. Once we host a
  release of a given library, we are
  committed to hosting that release
  indefinitely.
One of the main points of Google hosting the jQuery library is so that it is cached in a single place.  Consider the following scenario:
- User visits site A
- Site A has jQuery on the same domain, so the file is downloaded by the browser
- User visits site B
- Site B has jQuery on the same domain, so the file is downloaded by the browser a second time.
Now if we all fetched jQuery from the Google servers, the scenario goes like this:
- User visits site A
- Site A loads jQuery from Google, so it's downloaded by the browser
- User visits site B
- Site B loads jQuery from Google, but the browser already downloaded it and cached it, so fetching the file again is instantaneous.