In December 2001, when there was no Digg or StumbleUpon, Google Toolbar launched a beta version:
A new version of the Google toolbar now in beta testing sports a new look -- happy and sad faces that let toolbar users rate web pages. (...)
Google says that excessive clicks are watched for. Google also assures that it has mechanisms in place to ensure good sites don't get penalized by competitors voting against them.
Here's how Google describes the feature: "Use these buttons to vote for or against a page or search result. Click the happy or unhappy face to tell Google that you like or dislike a particular page. You can also use these buttons to report especially good or bad results after you do a search with Google."
Matt Cutts explained at that time: "Right now it's just an experiment. Worst case, it's an easy way for people to report spam that we can handle automatically. We might see if we can improve our search with this data."
In 2003, when Google Toolbar 2 was launched, Google was still undecided: "This feature is currently in test mode, so you will not notice any immediate effects based on your action, other than experiencing a warm sense of satisfaction from having shared your feelings with people who really do care."
The tests must have been positive since the feature was included in the next version too. It's interesting to note that the mysterious feature continous to be available in the Internet Explorer version of Google Toolbar (Settings > Options > More > Voting), but it hasn't been included in the Firefox extension.
This small feature may have been responsible for detecting spam sites or for changing page rankings, but Google could resurrect it and make it a part of Google Personalized Search. They already show interesting pages related to your interests, these voting buttons could refine Google's data and improve the personalized search results.