Is Google using extreme programming? One of the elements of extreme programming is user stories. Perhaps Google is not using extreme programming as is, but it looks like it is using some similar approach to software development.
First, Google toys with very simple applications with very few features, then adds more features later on based on usage patterns and feedback of users. Take for instance Google Page Creator. The feature set it presents is really minimal. This is not only good for users, making the application easy to use and less confusing by not providing too much choices, but also this is a method for developing applications, by starting with very basic functionality then adding only what users need based on their feedback and usage patterns.
As for user stories, Google tries to collect them using several means, two of which are discussion groups and direct requests for feedback and 'testimonials' in the form of stories. Here are some testimonials about Google Docs & Spreadsheets. In the Google Docs & Spreadsheets Help Group there is a special section dedicated for encouraging you to share your storey about Google Docs & Spreadsheets. Those stories and those testimonials are not for the sake of testimonials, but Google is using them to develop its applications. This is the methodology Google is following. Sure such a methodology is unique, not all applications can be built this way, for Google has a huge user base from which it can sculpture its applications by feeding on their feedback, stories and usage patterns.
Here is another page from Google pausing as a testimonial page, enticing people to share their stories in the hope of getting features there. A top link at the page explicitly calls for users to Share your story with us.