We should not have to construct Google's side of things for them. Google is not a retarded person facing the death penalty, unable to defend themselves. They are a multi-billion dollar company with an army of lawyers and an even bigger army of computers, and if one of those computers had displayed a message to this person explaining their side, it is likely we none of this would have happened.
Legally speaking, I think the judge had to rule this way. He didn't contradict the part of the contract that says Google can terminate any account; he just said that regardless of any account termination, Google still has to pay you money if they owe you money. Duh. The account holder presented evidence that Google owed money, and Google presented no evidence that they didn't. End of story.
I remember when Paypal seemed like the most awesome idea since the invention of money, and I remember when they waited until there was a lot of money in my account and then tried to close that account. Is Google only examining accounts to see if they fit the terms of service once they owe the account a lot of money ? It would seem uncharacteristic of them, based on what I know of the company, but it is not implausible. It's the type of shitty thing big corporate bureaucracies do.