Looking around on the web I see some accusations of it being unglamorous, but as far as I can tell it's just the sort of thing Google's strong at: large distributed systems, web access, etc. And there is plenty of room for interesting algorithms.
I hadn't really thought hard about it until I learned we were making this thing, but there's a lot more than simply caching if you intend to do it well. For example: "differential compression of web pages" means that if you know the client already has an old version of a page, you can potentially just send them a diff from the old to the new page.
I've already seen one bug report that's a little depressing: link prefetching may "click" on links like "delete this item". How? Because webmasters don't know the difference between GET and POST. Uninformed users always get in the way of nice technology. :)