UPDATE: I made a mistake on this one. Doug comments that this is done on purpose and properly documented by Google.

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Google changes its organic results (the ones on the left, not the paid ones), based on your search behavior. Screenshots below.

A friend of mine maintains developmentblogs.org and was checking his ranking on google on the query: "development blogs". He tells me he ranks 4. I go to google, check and cant find him. He then logs out of his google account, performs the search again and ta-da...his site is not even in the first 5 pages...

See for yourself: The result page while he is logged in:

and the page not logged in;

Because my friend performed this search several times in the past, Google included the results when they knew it was him but excluded it when he was logged out.

I understand that there is value in showing search history results but why wouldn't they put them in a different part of the page, visually differentiating them? 

This is a big deal since part of Google's credibility rests on its ability to deliver unbiased, unfiltered (except for french and chinese users) search results.

See this statement from their corporate philosophy page:
It is a core value for Google that there be no compromising of the integrity of our results. We never manipulate rankings to put our partners higher in our search results. No one can buy better PageRank. Our users trust Google's objectivity and no short-term gain could ever justify breaching that trust. 
They seem to be changing that.