Gmail was/is an awesome product and path breaking in many ways. Google provided 1GB storage when yahoo gave 4MB! Not only that, compared to Yahoo's interface Gmail was light-years ahead. It did what every great design does i.e. get out of the way and let them do what they want to. Gmail had features which people needed and they used the right technology to deliver it. It was first free ajaxified email client(a major one at least) and allowed people to do everything without reloading the page.
Wave, on the other hand, is almost obnoxious. It is as if Google is trying very hard to show off what it can do instead of delivering what people need/want. For instance, that live typing thing. I hate that feature. It is like the unix "talk" on console back in college and I hated it back then too. I do not want people to see what I am typing. I write angry things sometimes which I never send and therefore I do not want people to read what I type. I have talked to people about it and everybody feels that real time typing is just overkill. If you think about it e-mails allow people to speak freely without the fear of others stepping on your feet. It also allows you to think about what you want to convey, double/triple check what you are sending, check facts etc. Google wave just kills all this in one go!
I am sure Google engineers/product managers know that but they are too obsessed with the technology to kill this feature. Or may be they do not realize it. That is a bigger problem which means they do not understand the domain problem well and do not know what problem they intend to solve.
Even if Google gives and option to switch it off, I do not think Wave is going anywhere in this avatar. Wave UI sucks: It is unintuitive, slow and generally not well thought out. So even if they give an option to switch off the instant typing thing, this is not so easy to fix. For instance, if there is a long wave and there are to new waves at different ends of the conversation, I do not know how to find them. The enter key doesn't work as expected. There are so many "unsynced waves" notification. I can go on and on and on.