My theory is that they wanted to avoid PHB types saying 'Internet Explorer is at version 9 - this new Google browser, only version 3? Is it ready for the enterprise?'.
This is also part of why MS were obsessed with using calendar years for version numbers, windows 95 and so on. It makes things seem obsolete automatically with the passage of time.
There's that, but it probably fits better into their development model.
If they're continually adding features and not breaking backwards compatibility on a "fixed" timeline, then the major version jumps that Firefox, IE do etc. seem more pointless than anything.
If I've got this application that we're continually developing on and we're using a 2 month lifecycle for development ... at what point does it make sense to jump a major version? Never? What's the point of it then?
It's the fact that we've become accustomed to major versions representing periods of time.
Version numbers should be representative. If it was the case that they used the minor number to represent their two month cycles, then they'd be at 1.11. What's the point of the 1 in that scenario? It's redundant.
The major version increments fit in better with their development lifecycle, so why not use it?
I personally find larger version numbers a bit odd. Generally people tend to work better with smaller numbers. I think the Ubuntu system is pretty good, use the major version for the year and have the month as the minor version. The Chrome 2 month releases could go 1.1, 1.3, 1.5, etc. That way they wouldn't chew through so many numbers. Ultimately I guess projects must go through a reset of their versions before they get to really ridiculous numbers.
Chrome's 6-week release cycle (with no support or security updates for old versions) is probably a much harder sell to enterprise IT departments than a low version number would be.