I've seen several good posts (   ) already with predictions for 2006. I thought I'd throw my thoughts out there too.
My predictions for 2006:
After putting Google on a pedestal, the press will start knocking it down. A firestorm of bad press will undermine the pillars of hype that support Google's lofty stock price, but the negativity will not be justified by any noticeable weakness in Google's business.
Yahoo will double down on their bets in community and social networking, including buying at least two more startups working in the area. Results of their efforts will be mixed, popular among early adopters, but largely a dud for the mainstream.
Microsoft will launch an AdSense-like advertising product in the hopes of undermining Google's business, but the product will fail to attract a large network in 2006 due to relatively weak ad targeting and low clickthrough rates.
MSN Search will increase market share, but only modestly in 2006. Other search engines will not move noticeably. Searchers will continue to view Google as having the best search results, whether or not that perception is accurate.
Microsoft will abandon Windows Live.
Tagging documents (My Web 2.0, del.icio.us, tag search of documents) will fail to attract mainstream interest. Tagging will continue to be popular for photos, videos, and other items with poor metadata.
Flickr, Technorati, del.icio.us, and other popular tagging sites will find themselves under assault by spammers. Like with splogs, efforts to battle the influx of crap will be only partially successful.
Wikipedia will be sabotaged by a spam robot coming over a botnet. The spam robot will makes millions of subtle, small changes to the articles, many of which go undetected for long periods of time. Unable to keep up, Wikipedia will be forced to shut off anonymous edits and place other controls on changes.
Yahoo and MSN finally will launch blog search. Google Blog Search will grab majority market share anyway. Technorati, Feedster, and other blog search pure play startups will struggle.
The massive power of Google's cluster will be demonstrated in a much more ambitious version of Google Q&A (currently a modest experiment with automated knowledge extraction of answers from the Web). It will be well received. The launch will send the other search giants, who have been favoring simpler canned shortcuts instead, into a panic.
Interest in attention and personalization of information will grow as searchers become increasingly desperate for an easy way to surface the good stuff from all the crap out there. We'll see many new startups offering personalization products, most of which will be peddling junk. The hype will attract VCs. They will follow each other on in, bleating joyfully as they shower investment capital indiscriminately on good and bad alike.
Google will add an experiment with personalized news to Google News and expand on their personalized search. MSN and Yahoo will experiment with personalization and recommendations in news, search, and shopping. All three will experiment with highly targeted advertising using your search and browsing clickstream.
The hype about mashups and APIs will fade as more and more developers are frustrated by crippled APIs, lack of service quality guarantees, and lack of bargaining power in negotiations for commercial use of the APIs.
As their own business slows, eBay will make other large acquisitions in an effort to buy growth.
Update: Some good discussion in the comments on this post, especially on the Windows Live prediction.