Image to show what i mean -
http://twitpic.com/5s4jwl
Carl, iOS on the iPhone 4 scales the images up to maintain the layout of the web pages while presenting the text in full resolution.
If you have an iPad you can see this "layout preserving" scale feature by loading up your Google homepage example in landscape, (1024 pixels wide), then rotating your iPad to portrait (768 pixels wide).
When you rotate the screen, you'll notice the 270 pixel Google logo has been scaled so that it occupies the same ratio of the screen as before.
On the iPhone 4 (and future iPad HD or what ever they call it) you don't notice that some images are scaled as they have the same "pixels per inch" as on your desktop even when scaled.
If you had an iPhone 3G/3GS and an iPhone 4 side by side, you could measure the Google logo and they would be exactly the same width and height on both displays, even though the iPhone 4 has quadruple the pixels. Both logos would look identical, even though one is scaled -- and I mean totally optically identical, even under a magnifying glass. The text on the iPhone 4 would look significantly better though, as four times as many pixels are used for each letter.
So basically what I'm saying is that iOS is smart about page layout and images and works behind the scene to make sure that people don't experience the sample image you composited.
Form elements also have their dimensions doubled - so you can still press the submit button, or type inside fields.
Hope this clears up how Retina displays work in the browser on iOS devices.