Just in case anyone else runs into this problem, I was not able to get any photos to show up in my gallery from the picasa web account I setup. There should be an option in under 'account & sync settings' and your gmail account where it shows 'sync picasa web albums'.

because i added the picasa account after the nexus one was setup, the only option was to do a factory reset in order to show the sync option but instead I opened another gmail account and setup picasa with that account.

now i'm seeing the folders in the gallery and it is syncing properly.

Now my next battle with google and this phone is to figure out how i can control what is viewable in the gallery so i don't have an endless set of gallery pics showing up including random crap like cache files.

anyone know how to get through this one please let me know