Their metrics indicate that it works, and I'm inclined to believe the hard evidence over the vague guidelines of the UI textbooks. Besides, Google is used extremely frequently. They may want an interface that is efficient rather than one that is immediately intuitive.
I think the number of people who will be confused, frustrated, or won't be able to find something they were looking for on the google homepage due to this change is pretty close to zero.
Calling this "hiding controls" is a rather terrible way to frame the discussion.
Less is more, more or less. If they can get away with hiding unimportant controls, the few important controls left will be more prominent and possibly easier to use.