“Google Checkout sellers of real estate rentals, timeshares, and day sight-seeing tours must have a valid public business URL,” says Sammer Abdul of Google Checkout Operations. “The sellers may, however, choose to use either Checkout buttons or Checkout invoices to process transactions for the above allowable services based on their business requirements.”

The Google Checkout merchant help center provides a list of product categories (as well as examples), which are still considered unacceptable. Some of these are obvious (illegal goods), and some not so obvious (Travel packages and offers).
The competition is heating up among payment services, with Facebook now widely considered a potential big-player, and possibly Apple too. By not offering real estate rentals, timeshares, etc. Google is missing out on a fair amount of business. This is likely the driving factor behind Google’s decision to allow these.
On a semi-related note, Google recently announced it has made it easier to link Google Checkout with Google Base accounts. There’s a new page in the “settings” tab called “Checkout,” where you can add accounts to Checkout by entering a Checkout Merchant ID.