1. Even if Google pulls out of China, this is not going to stop cyber-attacks; there would still be plenty of other Google targets to attack. Similarly, even if they stop offering Gmail services to new Chinese users, they will still have a lot of existing Chinese users to take care of. Security breaches will continue, especially among human rights activists who are not always the geekiest cybersecurity experts around. So even if Google shuts down their China operation, they will still continue incuring costs of doing business with the Chinese Internet users.
2. Right until this week future looked anything but bright for Google - the Chinese government had a growing list of restrictions they want to impose. That said, they couldn't have chosen a better timing for their announcement. First, Secretary of State Clinton is to make a big speech about Internet freedom on Jan 21: now there is no way she will be able to skirt over the Google/China/cybersecurity issue even if she wants to. Second, tying their announcement about ending their censorship of search results to cyber-attacks on three dozen American companies is also a brilliant PR move: now everyone is concerned that the Chinese might steal sensitive data from the defense industry. It's no surprise than NSA is getting interested in the story. One doesn't need to know much about US politics to realize that framing this as a national security issue is going to make Google's case for US government's pressure on China much stronger than if it was simply framed as a freedom of expression issue.
3. In other words, Google has managed to turn their business quandary over what to do about China into a political affair, with the US government having no choice but to play second fiddle to Google's first. Now it's not just Mountain View vs Beijing, it's Washington/Mountain View vs Beijing. Brilliant. No wonder Google has been hiring all those smart policy types with government experience: you can see they are acting very smart.
It's a very high-risk gamble they are playing but keep in mind that Google needed to sort out their China problem anyway - it's better to do it now, with full support of the US government/policy-makers, than later (imagine the kind of publicity fallout were it to be known than the email accounts of the Chinese human rights activists were compromised and Google didn't warn anyone else about it).
I still stand by my earlier interpretation: this is a rather well-calculated and cold-blooded move by Google, which only has a peripheral connection to such issues as human rights and freedom of expression. It's all about getting more leverage over the Chinese government.