Quoting Jason Goldman, Blogger Product Manager from their Google blog:
Update: We’ve determined the cause of tonight’s outage. The blog was mistakenly deleted by us (d’oh!) which allowed the blog address to be temporarily claimed by another user. This was not a hack, and nobody guessed our password. Our bad.
It happens to the best of us. Google admits it because admitting the error right off the bat shows that they’re not just an online juggernaut. They’re just humans trying their best not to do evil. I like this side of big co-operations, and we’re seeing more and more of this pragmatic approach.