I think we'll still see a lot of innovation in search, but it will come from two places. First, it'll come from Google (as it already does). They are constantly adding new features and functionality to search, and making the results "smarter." Second, it'll come from the fringe -- the smaller players out there who can afford to innovate.
Yahoo and MSN can't afford to get too creative. They have to provide the "me too" features of Google in order to attract users and advertisers.
And yes, the battle for first place was over a long time ago.
=== Absolute power corrupts absolutely ===