Is Google trying to provide quality SERPs?

[Gracia]

I've been following the NoFollow topics over the past week or so and am quite surpised at how wide the opinions range on the topic (and how vehement everyone can be in defending their opinions). This has brought back a question that's been nagging at me for months that I can't begin to answer. Thought I'd throw it out there:
How committed it Google to providing the best, most relevant SERPS it possibly can?

Here's a little background on how I started asking myself this question. I spend a lot of time and money on AdWords. Many months ago, a colleague told me that AdWords was in for a bunch of trouble because the relevance and quality of ads was so poor (this was the height of MFA sites). He said that Google users were subconsciously training themselves to avoid AdWords ads and focus on organic results. Seemed to make a bit of sense, and his opinion was validated when Google expanded its AdWords quality component.

As I see it, it has worked. AdWords ads are much better than they were 6 months ago, and my CTRs and conversions have improved as well.

What I haven't seen is a corresponding improvement to the quality of organic results. I believe it must be harder for Google on the organic side, but I'm also beginning to wonder about their motivation. Are they really TRYING to rank the most relevant sites on the net?

I have always had a lot of faith in Google, but it starts to waiver when I see them doing other questionable things to increase revenue (changing AdWords background color to be less discernable from organic listing, prodding publishers to make their AdSense less discernable from content).

Could Google intentionally be creating SERPs that are just good enough to bring users back for their next search, but not as good or as relevant as AdWords?