I have no problem differentiating ads from search results, whether listed down the right side or before the first search results. And since they are targeted by the search keywords, they are often quite useful, and not usually intrusive. If a few simple targeted ads like this pay for the search, as opposed to the awful generic boradcast ads found nearly everywhere else, I say hoorah for Google.
Something has to pay for what ads support, and the only alternative I can think of are either subscriptions or taxes. I'll take targeted simple ads anyday instead of taxes or broadcast generic ads.