Matt Cutts has indicated that the speed with which your website loads is going to be increasingly important and if you use webmaster tools you will see in the labs section an option on website performance. The fact that Google have added this section to their webmaster tools does seem to support the idea that website load speed is going to be increasingly important in search position.
If you look at this section you will see a graph showing where your website comes in terms of loading speed compared to other websites. The graph shows the 20th percentile ie the region within which the fastest 20% of websites fall. Ideally you want your website’s performance to be as close as possible to that section of the graph.
Under the graph you will see a list of your slowest urls with the average speed of download, bear in mind this will be over a range of servers and internet connections. Additionally there is a list of pages with suggestions as to how you could speed the pages up, most often by using gzip compression.
On the face of it this seems like a good move as nothing is more irritating than clicking through from a search onto a website that takes an age to load and locks your browser up, however there are much wider implications which may not be good. Many people have websites on servers over which they have no control and depending on their configuration these servers may run very slowly. The result is then that either your website suffers in searches or you have to move to faster more efficient servers which doubtlessly will be more costly and I can hear them hiking the prices up as I write! One possible consequence of this is that search engine results will over time be predominantly populated by only large businesses pushing the SME businesses out the bottom of the search results.
Another implication is for media based websites who use video clips etc as these always take a while to load and even I here in the UK find pages with videos a nightmare as I work with an internet connection via a mobile dongle. Your market may not involve countries outside the UK however your average website load speed will be calculated from everyone who tries to access your website whether they are in China, Russia, USA wherever and some of these countries have considerably less efficient broadband connections than the UK. So your website speed will be judged by download speeds in countries who are not relevant to your market.
There are many implications of deciding search position on website download speed and it will be interesting to see how this pans out over time.