The Google desktop relies on a substantial amount of infrastructure to run, typically a full browser with Javascript and various media plugins, etc.  Google Gadgets are also built around the idea that they're little software programs that you download and install persistently, and configure locally, while the chumby widgets are pulled on demand from the chumby server and the configuration is kept remotely.

Google Gadgets are also substantially larger than their chumby analogs - I've seen simple analog clocks that weigh in at over 400K, while similar Flash movies are under 4K in size.  This is probably acceptable for their system since they're only downloaded once and installed on a presumably large hard disk, but the chumby doesn't have anywhere to store them.

For fun, take a look at your task manager to see how much memory is being consumed by Google Gadgets with some modest number of widgets, and compare that to the chumby's hardware specifications.