In light of the recent Google Books/APA settlement, Harvard has examined the details and decided not to be part of the project after all.
Harvardâ€™s university-library director, Robert C. Darnton, wrote in a letter to the library staff, â€œthe settlement provides no assurance that the prices charged for access will be reasonable, especially since the subscription services will have no real competitors [and] the scope of access to the digitized books is in various ways both limited and uncertain.â€ He also expressed concern about the quality of the scanned books, which â€œin many cases will be missing photographs, illustrations, and other pictorial works, which will reduce their utility for research.â€
Update: According to the comments, I had this sort of wrong. Harvard is deciding to not have Google scan their copyrighted books but the digitzation project proceeds apace. Thanks Jon.