In a very descriptive post at SAI, Henry Blodget explains exactly what it was that Google was doing and how it may not have been as bad as the Wall Street Journal had pointed out. In a nutshell, despite the cookie setting, their are some sites that browsers see as trusted sites that are allowed to drop cookies for the users convenience.
Sites like Facebook, Apple.com, gmail.com etc, are allowed to put cookies into users browsers so that the user can stay online on the site. If not, as Blodget points out, the users would think something was broken because they had to sign in to Facebook every time they went back to the site.
Google’s sites, like gmail.com are of course trusted sites, however their Double Click ad serving site is probably not a trusted site. A group of Google engineers used a known work around in Safari so that Google could drop cookies in to help Double Click. For more on this visit Blodget’s post here.
Find the statement from Google After the break