Google almost never bans an app unless its vulgar or illegal.
This made me LOL - Google almost never bans vulgar or illegal apps, either. A quick look through the "Games - Just In" section shows most submitted apps to be a) pornographic; b) some sort of copyright infringing rip of a Java game; or c) an app designed for illegal purposes.
I've reported apps fitting the above quite a few times, and it's obvious to me that Google does absolutely NOTHING about any of them. What really takes the cake is that some of the vulgar apps show full nudity in the screenshots, with no way for parents to filter these apps from showing up when the kids are browsing the market.