With a few smaller companies doing it already, you had to see this one coming... at least I did although I must admit Google's "No Evil" thing was getting right in the middle. My best guess is that the search giant (we have a giant for everything, yes) better show growth potential on its various services if they want to do really well with their IPO auction.
But no, this doesn't mean Google is getting evil, they will start delivering 'relevant' banner ads on partner websites though:
Why is Google offering image ads?
Our commitment has always been to enhance the overall web experience for users, advertisers, and publishers by delivering relevant search results and ads. With image ads, this goal hasn't changed.
Google will use the same spidering methods used to target text-ads but with banners, for the time being there are no plans to show these on its own pages but 3rd parties only.
It'll be interesting to see how banners stand up against text ads, those will be playing side by side for the first time in such large scale.