However, in Germany, there will be a crucial difference, because over there Google has agreed to completely erase such data internally. AP writes:
"Google had agreed to erase the raw footage of faces, house numbers, license plates and individuals in Germany who have told authorities they do not want their information used in the service."
This is important from the aspect of privacy. If the image is only blurred, and Google still keeps the unblurred imagery internally, it's possible for Google to give the imagery to the court if ordered.
There are certain technical implications, too; as Google Blogoscoped has noticed, erasing the data would make it harder for Google to reuse this imagery later for the purpose of statistical analysis, for example.