I believe Google is running two types of product ads, although I am not 100% sure. I believe one is commission based product AdWords ads and the other is normal PPC based product ads. Here is some history:
Back in January 2008, Google began testing product (base) results in ads. They continued the test in October 2008 with expandable links to these ads. Then in February 2009, the ads became very well seen by many searchers. In May they tested one line product links and in August they tested open product ads. In April, I wrote how to get product images in AdWords ads. Keep in mind, some of these campaigns were not CPA driven, like the one I mention above.
Here is a picture of some product ads in the search results:
Forum discussion at Google Merchant Help.