Google has an encrypted web search option, running over SSL, which should keep third parties from reading your web traffic, but exactly how much does it protect you? Your ISP still needs to know where to send your requests, and it knows what those IP addresses mean, so they're going to know which websites you're on, even if they don't know what you're doing there. And the same will go for your employer, if you're trying to use encrypted search at work. Also, if you're signed in to your Google account while you search over SSL, your search terms will still be listed in your Google history.
So what actually gets hidden? The contents of what you search for, but not where you go after that, and not the fact that you're performing searches on a secure connection to Google. To keep the actual destination of your browsing a secret, you'd need an encrypted VPN to reroute the traffic.
Mokalus of Borg
PS - Privacy and security get more complicated all the time.
PPS - But they've always been particularly difficult on the net.