The game is a fun little time waster and the sad part about it is that we are doing some Google analysts job for them. This is the saddest aspect - there's nothing in it for the player. More to the point, we should be doing this with our own images. Not Google - let them try and appreciate, for once, the hard work it takes to optimise every image on site....

How many cool things will people do on the web for arbitrary points? And are the points actually arbitrary if they make people happy

Well, aside from virtually every online PC game, well, ever?

We are all homo ludens, to some extent. Just as we are homo sapiens, homo faber, etc.
http://en.wikipedia.org/wiki/Homo_Ludens

So, yes, there is some value beyond no monetary gain since we are "hardwired" for play. Google's image game provides an outlet.

Not my cup of tea, but I understand how it could be for some.