Putting everything in the browser doesn't buy you anything unless your goal is to put everything into your web services. Meanwhile it incurs a lot of costs because browsers are designed for client-server, which in Google's case was the point, but in a user-focused device it's a liability. You saddle yourself with javascript instead of better languages, you end up having to reimplement things like local storage and data transfer between applications, a lot of interesting applications will need access to lower level networking than browsers normally provide (e.g. ICMP, UDP, multicast) or some other access to hardware (e.g. access to USB devices).

Why build a second operating system inside the browser instead of just using the original operating system?