While nobody really knows what Google intends to do with all this information, once the policy goes into effect Thursday, March 1, 2012, you won't be able to opt out of it without abandoning Google completely.
Digital Journal provides these steps for deleting your search history:
1. Go to the google homepage and sign into your account.
2. Click the dropdown menu next to your name in the upper-right hand corner of your screen.
3. Click accounts settings
4. Find the "Services section"
5. Under "Services" there is a sub-section that reads "View, enable, disable web history." Click the link next to it that reads: "Go to Web History."
6. Click on "Remove all Web History"
When you click on "Remove all Web History," a message appears that says " Web History is Paused." What this means is that while Google will continue gathering and storing information about your web history it will make all data anonymous, that is, Google will not associate your Web History information with your online accounts and will therefore be unable to send you customized search results.