As I define privacy, privacy only matters when another human sees the privacy-sensitive information. As long as GMail only allows their computers to scan the emails for Ad Words, there really isn't a privacy breach. To the extent they collect aggregate statistics, that is in theory a privacy breach but one so diffuse that it is not practically worth worrying about.Of course, the moment a human reads your email or personally examines you, your privacy is infringed... but there is nothing special to GMail about that. Unless you run your own mail server and all your email, both sent and received, is encrypted, a wide variety of strangers have full access to your email messages already.
While Google may theoretically be able to do some scanning with their technology, again, there is nothing special to Google about this. If the goverment wants your email, they can subpoena it from AOL as easily as GMail.