While it is technically possible to block Google ads on web pages through Firefox extensions or by modifying the hosts file, these hiding methods are mostly implemented by tech-savvy users and may not have that big an effect on Google's revenue.
However, here's a secret trick - if you append the parameter "output=googleabout" to Google Web Search URL, the search results page will not carry any AdSense ads that are otherwise seen on the top and right sections of the page.
Here's a direct URL to search Google minus Adsense/Adwords ads:
Not sure why this parameter is in place but this default Google page could have a serious impact on their bottom line since it allows users to search Google sans advertisements without installing any geeky hacks. Thanks Vedrashko.
The following lines, when added to the Windows HOSTS file, will block Google from serving ads on your computer and won't track your visits on sites that use Google Analytics.
# [Google Inc]
127.0.0.1 pagead2.googlesyndication.com #[Google AdWords]
127.0.0.1 ssl.google-analytics.com #[urchinTracker]
127.0.0.1 www.google-analytics.com #[Google Analytics]
127.0.0.1 imageads.googleadservices.com #[Ewido.TrackingCookie.Googleadservices]
127.0.0.1 apps5.oingo.com #[Microsoft.Typo-Patrol]
127.0.0.1 service.urchin.com #[Urchin Tracking Module]
Related: How IE or FireFox Makes Money from Google