It's good to have a tool to organize bookmarks, and Google Notebook's basic capabilities are useful. You can easily save a site, either from a right-click menu in your browser or directly from a Google Search page. Saved sites can be organized into categories. You can also make your notebooks public (see my test here).
But it's at this point that I run out of nice things to say, because that's about all there is to it. Google Notebook doesn't even offer tagging, which is a bizarre omission in a modern organizational product. Instead, it lets you set categories for your bookmarks, but bookmarks can appear in only one category. So if you had categories for "funny" and "news," and you wanted The Onion to be in both, you couldn't do it (unless you created two separate bookmarks when you were on The Onion's site--very awkward).
Google Notebook is the spoiled rich kid of bookmark utilities. It'll do well because its parent will make it famous. But it's not talented enough to hang out with Del.icio.us.
Is there hope for this child? Absolutely. Better social features (like in StumbleUpon [blog post]), group voting (like in Digg), and interface features (a toolbar bookmarklet would be nice) would bring this product up to grade level. And there are lots of opportunities beyond that, too, but we'll leave it to the child to figure out his extra-credit curriculum.