Search Engine Land (SEL) comments on the Wall Street Journal article that Google is pushing further and further on its bid to distribute its software and services bundles through wireless carrier relationships and to producing it's own handset.
SEL reports in this article that talks are far along with T-Mobile (relative to the Side-Kick connection), but I see them as a better fit to go with Verizon Wireless. The only reason I say this is because the Google team in NYC works closely with Verizon Wireless, from what I've heard here and there.
With regard to a Google handset, on the one hand it makes sense because it would fly of the shelves. BUT, who besides Apple has ever made money on a handset. And Google is a search company, not a PC or handset maker. I think that they are going to spread themselves too thin.