The big debate around Google Fiber of late is whether the company actually intends to pursue this business for the long haul. According to company officials it is a business that the company wants to be in and they expect it to be profitable at some point - see statement from Google Fiber VP Milo Medin here. Some observers and analysts contend that the capital intensive business of building a fiber network (beyond just a few hand picked cities) is way outside of Google's core businesses.
So a city as complex and difficult to work in as New York City may be way down the list of target cities.
That high cost of doing business, however, comes with an upside--the incredible population density, per capita income, and profit potential. Google can't ignore New York City especially if it expects Google Fiber to: 1) be taken seriously, and 2) make money. The company will have to be creative when developing a deployment plan for NYC, which will look a lot different than the "stringing fiber on existing utility poles" methodology being used in the markets they have so far announced.
The combination of increased consumer demand for high-bandwidth, reliable broadband services and the incumbents desire to cap usage and increase prices will continue to be a driving force in the emergence of truly competitive providers. (Not to mention the horrible customer service reputations earned by both Verizon and Time Warner Cable) Whether it is Google Fiber or some other locally based entity remains to be seen.