Google also scans your gmail messages for content OTHER THAN spam! They add it to their database to sell to advertisers to "customize your 'net experience".
When Big Brother arrives, his middle name will be "Google"!
Almost, but not exactly.

When you open a mail message, they scan the body for keywords and then present advertising based on those. For instance, when I get an email about a Model A, I might see advertising from MACs or eBay with Model A listings. This keyword information isn't stored and it's all machine generated (and it can be turned off).
From the relevant page on on the Google T&C:
We provide advertisers only aggregated non-personal information such as the number of times one of their ads was clicked. We do not sell, rent or otherwise share your personal information with any third parties except in the limited circumstances [...], such as when we believe we are required to do so by law.
There is definitely a trade-off (free, spam-less email service in return for ad views).
But I think that if you're expecting your ISP to somehow provide better privacy than an online service, you're going to be disappointed. Basically, both Google and your ISP are trying to make money off your online activities--expecting either them to respect your privacy is probably not a winning bet. You might ask your ISP how long they retain IP address information...
To be honest, anyone using the internet is giving away a lot more information about themselves than they likely realize. Just from your IP address and a quick search it would be pretty easy to find out where you live, your phone number, what your interests are, etc. (Left as an exercise for the reader). There are ways to be more anonymous--TOR and the like--but they tend to be cumbersome.
Someone once said that the only way to secure a computer from network attacks is to remove it from the network. Similarly, the only way to ensure complete privacy on the Internet is not to connect.
And I should probably report myself to Ryan, since this post doesn't really belong in the Model A discussion
