"once Google's new unified privacy policy takes effect all data already collected about you, including search queries, sites visited, age, gender and location will be gathered and assigned to your online identity represented by your Gmail and YouTube accounts. After the policy takes effect you are not allowed to opt out without abandoning Google altogether. But now before the policy takes effect, you have the option of deleting your Google Web History by modifying your settings so that Google is unable to associate data collected about you with your Gmail or YouTube accounts.
Electronic Frontier Foundation (EFF): "Search data can reveal particularly sensitive information about you, including facts about your location, interests, age, sexual orientation, religion, health concerns, and more."
This page tells you more about it and what to do:
