Kenny,
When they made the change, it had no algorithm change to search results. Meaning, the rankings themselves for the search results were not changed at all--but rather the effect of instant will be in the potential results shown to the end user and the long tails selected by the user.
It's based on popular search terms (see link below) which in turn is identical as the auto-complete algorithm. I remember reading an article by Cutts that mentioned the auto-complete algorithm is based not only on search volume, but also dozens of other factors such as location, if it's a mobile search, and previous results of other searchers clicking one of the auto-complete options over another, etc. Meaning even if something has a higher search volume according to the Keyword tool, it won't necessarily appear above the other search term.
I'd say it'll impact user behavior primarily. Users may become more lazy, or be less tempted to go the 2nd page of search result. I'd say another effect would be that "long tail" searchers will be guided towards longer tails. For instance, where I would'ave searched for "maxmind geoip php", I may instead click the first option on the auto-complete which may read "maxmind geoip php api." It's genius for Google, because long tails tend to have higher CPC bids for the "more niche" competition. Other changes could affect your adwords account (for SEM impressions) etc.
See:
http://www.google.com/support/websea...?answer=186610
Nitin