Google should have definitively deleted that video, because it is extremely offensive to the Muslim population and can cause harm because what if it can start a war? I believe that material that offensive has a consequence of being able to be freely published on the internet, and the least google could have done was to remove it from their search engine.
People can say what they want to say even if it offends some people. I don't think America could call itself a democracy if it deleted the video (unfortunately they have now). Also are Muslims so insecure about their religion that they need to protest and riot about it. Surely if you worship something that's fine. It's not fine to get angry when someone expresses a different view or pokes a bit of fun at it.
Freedom of speech and expression is very important. We can't censor materials. It was a disgusting video but it was within their right. It isn't our fault the Muslim world is so backwards, ignorant, and 3rd world that they use it as an excuse to justify rioting. They censor their people. How does sharia law work? how is there healthcare system?
Freedom of expression is freedom of expression even if some people don't like it. To censor them is a step towards being able to censor others too for other videos and topics. It sets a bad precedent. So no I don't think Google should have deleted the Innocence of Muslims video, I think they should have told those offended to get over themselves.
Google should not be required to delete anything simply because it offends people. There is all kinds of offensive material on Google already, so why should this one video get any special treatment? If people are offended, they don't have to look at it, and if they're really offended, they can make their own rebuttal video, which Google will also host.