The Register is reporting in Google at work on desktop Linux that Google has confirmed it is working on a desktop Linux project called "Goobuntu." What exactly is the project? No further details have been released. Since Ubuntu is a Linux operating system release, speculation is that this might be a Google play for releasing its own computer operating system. Or, it could be something used by engineers internally, The Register suggests. For related coverage, see this thread at Memeorandum.
Postscript: Google denies plans to distribute OS based on Ubuntu from Ars Technica covers more on how this is an internal Linux OS used by Google and which the company says it has no plans to distribute to the public.