I can't describe how happy it makes me to see people debating about Linux and the GPL. I, like you, have an opinion on this current subject, but I'd rather just make a few comments or observations. Here we go...
1) GPL'ed software is not (just) about cost. If you've followed Linux development AT ALL over the past decade, you know who Alan Cox is. There are a few, let's call them big boys, in the Linux community, and he's one of them. He's also a big proponent of free (as in speech, not beer) software. He believes in protecting freedoms through the use of the GPL. I would encourage some of you keep this in mind. Also, if Nvidia believes it has something to protect by keeping its source closed (and I would guess it's the bottom line, but it's closed source, so that's just conjecture), then they have that same right.
2) Nvidia has a horrible reputation in the free software community and are notoriously difficult to work with. I believe someone above posted a link to some of Linus' comments. However, since I started using Linux exclusively (almost 10 years now), they have supplied working and fast proprietary drivers. Obviously, I'd rather them be licensed under a free software license, but at least we have them. I'll not complain too much.
3) A large subject that I'm surprised nobody mentioned. Android. Android is, technically, just another Linux distribution. It uses the Linux kernel (with Google's patches) with software sitting on top. Also, I'm also pretty sure most of you have heard of Nvidia's Tegra chip. Does Nvidia's intention to get into the mainline kernel (at least to some degree) make a little more sense now?
4) AMD opened up much of its driver, and because of this, acquired a huge business deal (100+ million dollars) in China. This same company skipped over Nvidia because they were unwilling to do this. So could keeping things closed also be a liability in business?
5) There are also other rather technical things to consider. Legal issues on proprietary module insertion (Linux is a macrokernel). Could Nvidia just open up it's base code (the Windows and Linux drivers use much of the same code) and just tack on proprietary things later, perhaps under a different license? Things like X.org come into play as well. Etc Etc.
So there is some food for thought. Hopefully.