Google Instant is a new search enhancement that shows results as you type.

Advantages to the users:
1. Faster a better live results.
2. More intuitive with auto suggestion.
3. Live Spell checks and suggestions as we type.
4. Time saver and Enter key will last longer.

Advantages for Google :
1. Less server overhead.
2. Better user response.

Issue #1 noticed :
Bandwidth try uploading a large file and try to use instant, the below is what one sees! Even though you might have a higher speed line at that instances if your speed is low, instant is turned off and does not turn on automatically, after the load is freed.

Google has black listed humongous number of words, indeed what may be the justification given by Google, the reason is pretty clear for smart Gogglers ;)

Interesting suggestions :
Get autocomplete suggestions as you type in Google scribe.

After Google instant search :
Youtube instant and Map instant were born, /me wonders up next would be instant image search? or maybe instant address bar?

Update Sep 11 2010:
My guess came right, Google Chrome now with instant address bar!