I downloaded the newest Chrome and setup the sync.  It is easy to do, just need to add the –enable-sync switch onto the end of your Chrome shortcut (in Windows).  Once you have enabled the switch, and restarted Chrome you will have a new option to setup sync.  It uses your Google Account and oddly enough it stores the bookmarks not in Google Bookmarks but rather in Google Docs.  It took me a few minutes to find where they were stored but I noticed that I now have a Hidden option between Starred and Trash in the Google Docs sidebar and in that Hidden folder are all of my bookmarks.  This was quite unexpected as it leaves all of those bookmarks I have built up in Google Bookmarks high and dry.  It also continues the trend in Chrome to not offer tagging for bookmarks.

UPDATE:

It appears that the bookmarks are not just in hidden, they also do show up in an obviously named Google Chrome folder in the sidebar.  Not sure how I missed that one.

I have assumed that Google would be working on an enhanced bookmarking application that would be a part of the Google OS, but perhaps I am wrong.  It will be interesting to see how things develop.