I don't know any details and I can't comment whether Google had legal grounds. For all I know, Mark could've really stepped over his NDA. Yet, this whole story somehow just doesn't jibe with Google's "Do No Evil" moto. It just doesn't seem right.
It seems that for all the transparency Google brings to the Web, they would prefer to keep any information about the company under tight PR control and let out only what's approved. I can't say I am surprised - Google executives certainly realize that the image is essential for the stock price and in the end Google is just a business (big one, with a lot of financial interests involved).
In any case, I feel bad for Mark. I am sure he wouldn't have problem finding another job. Still, it's a bummer. I hope Google at least gave him a good severance and covered the relocation expenses.