Google HAS done this. I'm one of Google+'s very few fanatics, and searches for local businesses and so on turn up recommendations from friends.

G+ is everything this guy dreams of. And it's already very well-executed. All that's needed is a critical mass of users, which Google is (wisely) wooing with photo enhancements and great privacy settings. It might take a generation of teenage turnover, but I just don't see how Google can lose this war.