Steve Rubel makes an the argument that Google Instant will kill SEO because:
Here's what this [Google Instant] means: no two people will see the same web. Once a single search would do the trick - and everyone saw the same results. That's what made search engine optimization work. Now, with this, everyone is going to start tweaking their searches in real-time. The reason this is a game changer is feedback. When you get feedback, you change your behaviors.
Searches will be more unique -- Agree
When you get feedback, you change your behavior -- Agree
Once a single search would do the trick - and everyone saw the same results - Big deal
Search has always been a very personalized engagement with the Web. Just because people will be tweaking their searches does not mean that that search isn't part of a common cluster of search terms that folks use. How many different ways can one search for a restaurant in Aspen Colorado? There are just so many terms that one can use. So I don't believe that search will kill SEO. Pulling from Bob Warfield's blog...Even the Google Smarter Predictions folks say, “Even when you don’t know exactly what you’re looking for, we will push you in the direction of what the masses are looking for. We will perturb search in the direction of sameness.” Again, there are masses of same search types out there which one could optimize around.
The more fundamental question is... should you have even been bothering with SEO to begin with? After all, as Bob Warfield points out, its content that's king.
For marketing, content trumps SEO and links back to your site. That’s not to say there is no value in SEO or links, just that if you have to choose or prioritize, content is at the top of the heap. If you’re a big company, you can probably choose to invest in all with far more resources than perhaps are even needed. But the smaller your budget, the more likely you had better choose and make the right choice. Pssst: the right choice is Content!
Regarding SEO being marginalized, Bob argues:
If, instead of feedback changing behaviors to be less predictable as Rubel implies, it actually makes the behaviors more predictable because we are guided to sameness, SEO is still dead, but for a much less interesting reason. This sameness makes it much harder to game. You can no longer count on the Long Tail queries to help you out when you can’t secure the top spots on the common queries. It is a repressive tax on the Long Tail, in other words.
Agree that you can't game the SEO system easily with Google Instant, although search providers have been making it harder to game the system for years now. So.. forget about Google Instant making SEO irrelevant. You can still optimize around those "sameness clusters" and focus on driving traffic with your compelling content.