Official Google Blog: Google search privacy: Plain and simple
Search queries saved in logs: Misspelled search terms, prompts for “did you mean”.
IP address: Search results returned to the correct computer. Can tell which provider and general location.
Cookies: Small file stored on computer. Reminds of preferences from last time. Search results per pages and language preference
Log of visit: Receipt of visit. Search term, IP address, cookie ID, browser version, operating system, date and time of search.
Some parts of IP address and cookie will be deleted after 18 months.