Here is the question I asked Brian Krebs, at "Security Fix Live chat"

Northern VA: What are your thoughts on privacy in regard to Google
services(Gmail, Google Docs, etc.), should we really be worried that
our stuff are being read? Gmail probably does scan the contents,
because they display relevant ads.

[answer]:
Brian Krebs: "As I wrote in a story earlier this year, there is no
such thing as "free" online. To quote someone smarter than me, the
things we think are free we actually pay for in micropayments of
personal information over time, micropayments that translate in
marketers building pretty large databases about each of us, our
preferences, where we like to go online, etc. Some people don't really
care if marketers have this information. Others find it very
unsettling. In the end, it doesn't matter where I come down on this
really: The question is whether the trade-off is worth it to you?

Gmail's services are free, right? Well, that depends on how YOU look
at it. Of course they are mining keywords in your emails and documents
to serve you more targeted ads -- they state that up front in their
terms of service. Does some at Google go through hundreds and millions
of peoples' billions of gmails a day and start reading messages? Not
likely.

Free or no, I'd encourage people to be aware that e-mail is not a
secure form of communication. Yes, Gmail and some other providers
allow you to tweak their settings so that every email you send is
encrypted and cannot be intercepted, but if you're truly worried about
privacy in the traditional sense -- that someone isn't reading your
e-mail, that's a different question altogether."

http://www.washingtonpost.com/wp-dyn/content/discussion/2009/02/25/DI2009022500962.html

since chat is over link may not work, but Krebs' blog is:

http://voices.washingtonpost.com/securityfix/

How do you look at privacy as Krebs asked? Personally, I don't mind if the Gmail bots, scanners, whatever they be called, scan my messages to display relevant ads. The point is as long as it is not scanned by a human, I have no problem with mechanical methods.  Even if you use non-web based email, it is quite possible that your Internet Service Provider can scan/read your messages.... I've played around with text encryption here's one of many tools that do as such:  http://www.linkedresources.com/tools/encrypter/encrypter_v0.2b1.html