As I understand it, PPC fraud is only a problem on the content network (i.e. the ads carried by third party sites rather than on the main Google search results.) Certainly the claims made against Google come from the content network.
On Google itself, I've always found that the protection from clickfraud is fairly decent (one or two questionable results though). It's when the ads are hosted somewhere else that it gets horrible for Google to maintain any sort of control. If you're unsure, you can just change the settings so the ads don't show on the content network.
On Google's site, it tracks clicks on an ad from a single IP, and doesn't count them multiple times. If you want to test it, set up an ad and click it yourself lots of times! There are some complications behind some ISPs who use shared IP addresses (looking at you, AOL and NTL!) and multiple IPs per user, but generally I haven't found it to be a problem.
The main problem really is that even if clickfraud is happening, Google is still pretty much the only game in town if you really want to go to work with your online advertising. Until there's some serious competition, you have to decide whether the ROI is worth the small risk of defraudment.
