Chris sent me a great article by Parand Tony Darugar on the benefits of Google 20% time. His conclusion (emphasis mine):

It's all about short-cutting the product definition cycle, getting product out faster, going straight to working prototype, and making intelligent decisions about what to launch. It's avoiding decision by committee. It's a brilliant tool for accelerating value delivered to the company. It also keeps the monkeys happy and excited, but that's a side benefit.

I mostly agree with Darugar, but for this very last bit: I think keeping the monkeys happy and excited is critical for the health and well-being of any company; it's not just a side benefit.