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The wired article they link to has a better explanation as to what the google concept is. It really amounts to getting rid of the password "except is special cases". So, not quite replacing the password, but it most certainly seems like they want to take a lot of password typing away.

Taking the Wired article as the basis for my response, I can say I don't think this is a good idea. As AlderaanDuran explained, just passwords is weak and just a device is also weak. So, a combination of both would be best in my opinion. On top of that, I don't want to get a Google device to log in to my accounts. This needs to be an open standard which can be implemented by other organizations like Mozilla, the EFF or even Apple if people are OK with that.