Google Reader is the way I see the internet - I even wouldn't recognise most of the websites I follow if I've visited them. Byline, the best mobile Google Reader client, alone was enough reason to make me think to switch back to iPhone. So first thing is to find a replacement and in the past two days many blogs created lists of the alternatives (e.g. lifehacker, CNET) Reading the comments it seems that Feedly is the most recommended and given that they are going to create a Google Reader compatible API that makes it possible for the ex-Google Reader client apps to use their services (whilst probably most of the clients will just die) it seems a good choice except that I can't see how it meets Greg's "must have a solid business plan/revenue stream" requirement. Another one with "classic" UI, The Old Reader, has also positive reviews and there are many others with UI concepts different from the Google Reader's simplicity.
The question arises why does Google do this? Why are they killing a service with such a loyal community? A possible explanation is that Google needs their only team that understands social to work on other products (you don't need to register, just read the first answer). We can't know how many (active) users the Reader or Orkut have, but the numbers are probably in the same range: some 10 millions for Orkut and the same for Reader. And the fact that Orkut is still alive proves how anything social is more important for Google than a useful and loved service.