Dare has a good summary of the recent events surrounding web APIs, namely the Google and Del.icio.us moves away from server-side APIs to more Widget based functionality.
We talked about APIs back at the September PDX Web Innovators meeting, and much of that was focused around building mashups off of these services. I think it will be a real bummer if this trend continues, and less mashup-friendly services are offered. I agree with Dare that a site would be stupid to restrict ways to add stuff to your site. But it also strikes me that controlling the data extraction type of API would be a first step towards limiting a site’s viral uptake (though I’m sure Google’s not too concerned with that at this point in their existence).
Personally, I really like the Yahoo set of services, that give you a choice among different output formats (XML, JSON, and PHP), thereby making it easy to use on the server and client (kind of anyway, I can test easily by typing urls in the browser, but the cross-domain AJAX issue in most cases prevents direct use on the client-side).