Google Toolbar's buttons can display gadgets when you click on the little arrow. Here's the YouTube gadget in a custom button:
You'll find a lot of built-in buttons in the Settings: almost every Google service has a custom button. In addition to gadget support, buttons can now display alerts, show status text next to the icon and create actions based on text selection.
Bookmarks and notebooks are now completely integrated: each note is a bookmark with some clipped content and notebooks are a way to organize and share your bookmarks. You no longer need to install a separate plug-in for Google Notebook.
When you add a note, the text will be highlighted every time you open the page. If you also add some comments, they're displayed in a tooltip when you hover over the text (you're annotating the web):
You can now create profiles for AutoFill, there's an inline find bar similar to the one from Firefox and Google can replace the "Page not found" errors with useful suggestions.
Probably the most interesting new feature is that you can choose to save your settings on Google's servers so you can access your buttons, settings and AutoFill data even if you don't use the same computer.
This beta version of Google Toolbar 5 doesn't integrate with Google Docs and doesn't synchronize your local documents with the documents stored on Google's servers.
{ via Google Blogoscoped }