The Google Desktop team just announced that version 4 of the software has left beta status, so all you cynics about perpetual beta can give it a rest! This version only spent 6 weeks in beta. Maybe GMail is next, who knows?

Today’s announcement included the expansion of Google Desktop into now 27 languages, the availability of a new drag and drop system for gadget (or widget) UI development and a contest for the development of new gadgets. If you’re a PC user interested in having the newest Digg headlines, a Skype plug in or NASA TV on your desktop then Google Desktop Gadgets could be for you. (In previous TechCrunch coverage, Mike has posted a number of critiques of Google Desktop’s privacy and file handling features.)

Development contests like this are always of interest to me. Are they just a cheap way to score programming energy? Are they the ticket to future fame and fortune by the newly high-profile winners? Does anything truly useful come out of them? Since so many of these gadget/widget things are based on nice displays of RSS feeds, I’m convinced the possibilities are nearly endless. How about a widget that displays oceanic conditions from the Maine Ocean Observing System’s weather beacon RSS feed, or a gadget that grabs and displays the RSS feeds of all comments on my blog. Now that could be useful. Gadget/widget things may end up being the primary use of RSS, in fact.

Will we see more innovation in the gadget space or the widget space? That’s a ridiculous question.

The Mercury News points out a fairly basic flaw in Google’s Desktop Search application: it cannot track files if you move them around on your hard drive (changing folders, moving folders, etc.). The application will index new files added to the computer, but it doesn’t notice when an already-indexed file is moved to a different folder.

The solution? Uninstall and then reinstall the program, and endure the hours it will take for it to re-index your hard drive. Then, repeat the process when you move files into new folders again in the future.

Google is launching a new version (3.0) of their Desktop Search product, possibly tonight.

The biggest change is the option to store your hard drive index on Google’s servers instead of locally on your own computer. This allows searches from a remote computer (such as a work computer). This is of course a touchy privacy subject, but the ability to search from a remote computer will be very welcome by some users.

While Google has not yet released v 3.0, they are making significant changes to policies on their desktop which previously stated that hard drive data would never be stored on Google Servers.

Compare this new language talking about searching across computers to this old language stating that “these combined results can be seen only from your own computer; your computer’s content is never sent to Google (or anyone else).”. Look for the second link to be updated soon.

The new feature, called “Search Across Computers” stores file content on Google servers.

In order to share your indexed files between your computers, we first copy this content to Google Desktop servers located at Google. This is necessary, for example, if one of your computers is turned off or otherwise offline when new or updated items are indexed on another of your machines. We store this data temporarily on Google Desktop servers and automatically delete older flies, and your data is never accessible by anyone doing a Google search.

Search Across Computers is optional and only works with certain types of files:

• Web history (from Internet Explorer, Firefox, Netscape, and Mozilla)
• Microsoft Word documents
• Microsoft Excel spreadsheets
• Microsoft PowerPoint presentations
• PDF files and Text files in My Documents

Look for an announcement on Google’s Desktop Search Blog.

Yahoo and MSN, which have competing products at desktop.yahoo.com and desktop.msn.com, store users’ hard drive index only locally.

For additional commentary, listen to Steve and I debate the issue on a new Gillmor Daily, just posted here.

UPDATE: Google has announced this.