Remember that back in 2005 Google was still largely running under its founding principles of "Do no evil" and I honestly believe it was a truly altruistic move. Certainly, a great amount of coders got access to skills and support they would never have otherwise, and a huge amount of projects benefited from it. Google weren't the only supporters of it, I know Suse contributed and likely others.

So why do they still do it now that Google is all grown up and abandoned those founding principles?

I suspect it's due to some or all of these reasons;

Why not? It's good PR and cheap advertising.
They get to spot good developers early on and enhance their hiring quality.
Those developers bring energy, skills and access to projects. Those are the active employees that every employer wants.
The projects are used by Google so improving them is net benefit to the company.
Cancelling it now would lead to bad PR and bad feeling. Even Google doesn't want to needlessly waste a good thing. And if they did stop it, a competitor might swoop in and not only take the benefits from it whilst looking like the white knight.

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