Two ways of looking at it. Many see it as a betrayal of Google's ideals. They left in 2010 because there was a breach in gmail originating from government affiliates and consequently endangering customers. Also, it the west this was perceived as a stand against human rights issues in China. So now a reentry looks like they are backtracking from that stance.

On the other hand, as you say, a purely pragmatic view is that it wouldn't make the situation worse if they offer a censored search engine, because that's the only thing (most) Chinese users get now anyway.