We have a significant % of customers who use google checkout. Not sure the breakdown of Paypal vs Google checkout. Some people (myself included) prefer the simplicity of using their same Gmail account that they're probably already logged into vs Paypal. The more options the more better, if the integration doesn't give you too much trouble. The more ways to say "you don't have to give me your credit card info" the happier the customer.
If most of your customers use a CC/DC, then support both.
The things that PayPal can do, but GC cannot are: payment from an existing balance, eCheck funded payments, micropayments.
The only advantage to using one or the other, is it would focus your payments towards getting up to the next tier in reducing your merchant fee percentage.
We have a huge amount of our sellers using Google Checkout over PayPal as well. I prefer Google over PayPal as well as it's just a whole lot simpler.
I have A/B tested this. GC + Paypal outperforms either individually for my site.