Every time I start thinking about switching to Google's Chrome browser, they go and do something like this. Dropping H.264 support brings them right on par with my current and still favorite browser: Firefox.
Yes, it bugs me that Firefox doesn't support H.264. But if Chrome won't support it either, then that leaves me with Safari as my last best option, and that just won't do.
Much as I've been tempted, it looks doubtful I'll ever switch to Chrome.
UPDATE 1:
For a more detailed look, this superb Ars article.
UPDATE 2:
And an answer to the question, "Who's happy about this?"