I wear a code.google.com T-shirt on a regular basis--I have two and rotate through them. I was asked in the lunch line at my cafeteria if Google is open-sourcing their entire codebase. Erm, no, or at any rate, I seriously doubt it. They do contribute a great deal to the open source community though.
However, I did explain that google is indexing all open source code bases and making them searchable at www.google.com/codesearch.
code.google.com on the other hand is a portal about using Google's APIs and related activities. However, one of the coolest things (on the planet) is Google's Summer of Code. The Summer of Code is an opportunity for students to write code for open source projects. Google will fund more than 900 students this summer in the 2008 SoC. You should definitely check it out if you are a student looking for something useful to do with your coding skills this summer--the open source community always needs new blood.
One of the hottest API's of course is Android. Check it out.