Although the new one looks better [inspired by the design of André Resende, a computer science undergraduate student at the University of Campinas in Brazil], but I think they may change it again.
This is the story behind the new favicon, from Marissa Mayer:
"Back in June, we rolled out a new favicon — the small icon that greets you when you access Google on your URL bar or your bookmarks list — and we encouraged our users to submit their ideas for this important piece of Google branding. We were impressed by the volume of submissions we received, and today we are happy to introduce a new Google favicon inspired by those submissions by our users. André Resende, a computer science undergraduate student at the University of Campinas in Brazil, submitted the design that inspired our new favicon. His placement of a white 'g' on a color-blocked background was highly recognizable and attractive, while seeming to capture the essence of Google."