However the pages were taking a long time to load. This was a total suprise as it new browser runs lightning fast on other XP worstaions in the office.
I first though that the problem is with Vista but then noticed that the status bar prints"resolving proxy" message. We do not have proxy server in our office, so I checked the connection settings and realised that the problem is caused by Google's Web Accelerator which I installed yeterday!
Disabling the proxy in the connection settings and turning the accelerator off made the Google browser fly.

So looks like compatability issue between these two products.