This seems like a nice feature, but I think it's more than that. It's a very easy way to obtain a database of faces useful for face recognition. Algorithms for detecting and recognizing faces are good, but not good enough, and this is a great way for Google to improve their AI algorithms using the data obtained from its users.
Google was very close to acquire Riya, a face recognition service that has expanded into a visual search engine for people and objects. They didn't bought the company because they want to develop an in-house solution. This might be integrated into Picasa to automatically detect persons in your photos and organize them better (like MyHeritage does) and might be the foundation of a new kind of image search engine, that understands more from the pictures.
