Two different issues at hand here
1) Google sniffed the Wifi networks and recorded the publically broadcast MAC and SSID and put it in a database against the current GPS reading.
That, to me, is acceptable (I've chosen to have that information broadcast, and it's not personally identifying) and useful (as the letter writer states) for Wifi positioning. The journalist's response that this is only useful in urban areas were cell towers can be used doesn't work for, say, Wifi-only devices like the lower end iPad model, or most laptops.
2) Where the Wifi network wasn't password protected, Google also grabbed a sample of the traffic on the network, which could of course be anything that all. They say this was because of a programmer error.
This is the bit I have problems with. They had no reason to grab that data, and whilst it was publically broadcast, one can assume in this day and age it was only because of clueless users who don't understand how to set up wireless encryption. Exploiting those users feels rather mean spirited.
Slightly dissapointed the Register can't seem to tell one of these issues from the other in this article.