Google Apps provides a government edition: http://www.google.com/apps/intl/en/government/index.html

It's their personal accounts.

Then why would it matter if it got hacked? Surely they aren't conducting any official government "business" on their personal Gmail account, right?

To keep discussions off the public record.

http://motherjones.com/mojo/2010/06/starbucksgate-crew-calls...

Even in absence of some wrong-doing, officials are people too. Why would they conduct personal business using their work account?