I saw that UK Google street view news the other day. IMO, those villagers are justified in their actions and should just make sure their local council bans Google from photographing their neighborhoods. Any neighborhood should have that option even without a council declaration or by-law.
While the municipal property may be public, IMO, photographing it and putting all the path-like photos on a site as big and popular as Google Maps does bring up privacy concerns and shouldn't be protected under measures that guarantee or facilitate private parties from accessing that public property.
One common comment seen on the blogs reporting this story is that the UK is littered with CCTV and those citizens have no right to privacy because they've given it up. I don't buy that argument though. Nothing of what's going on with cameras in the UK amounts to the effect, impact and availability of what Google is publishing.
If you want to see what's on any of those streets currently, you have to go there in person. The citizens are fine with that, after all it's municipal/public property. However, Street View enables anyone to effectively "prowl" remotely from anywhere in the world. It a neat concept, but I don't think it, and Google, should be afforded any protections/rights to do this. They're going to profit from the results as well, their access to photograph should be considered a privilege.