An Associated Press article on this is at
Google hits streets, raises privacy concerns

A sample picture (the picture appears to have been partially blurred to avoid identifiable features of the person shown) does show that the playpen inside the house is pretty clearly identifiable. Note that the "fine zoom" slider on the left is at about 50%.

A previous similar effort by AOL was discontinued after numerous complaints, including objections from a "battered women's" facility that felt that showing pictures of women entering might make some reluctant to approach the facility for needed help.

A current Google "street scene" is being objected to because it "happens" to show a women's clinic during a weekly protest picketing session, giving a distorted "impression of risk" to those who might need its help.

The argument that "it doesn't bother me" does not carry much impact for those who are, for valid reasons affected invasively.

It would seem that Google has not clearly thought through what their "editorial policy" will be, and while it's possible that a policy that lives up to their "Don't Be Evil" creed can be worked into this, it's not apparent that they've tried really hard on it at this point.

Maybe those who don't wish to be shown at "Street View" need only post a small "GOOGLE SUCKS" sign in the window? If enough of them appear, perhaps a policy will follow.

John