I hate the term web 2.0, but I didn't realize why until I heard the mid-level corporate drones' (they grouplearn these things together at conferences) formulaic explanation of it: "social." They couldn't be more wrong.
The motivation for seeing it as social is a combination of bubble poster children Facebook, Myspace, and Twitter. What they neglected to look at is the beginning of the trend with Google. Expand that list a little and you'll get Google, YouTube, Flickr, Digg, Last.fm, and Pandora. Yes, some of them have thriving communities, but at the same time, some have downright toxic communities. What they actually have in common isn't "social," it's a focus on user experience and a blatant disregard for profits. That's it. What made Google so great was that it wasn't Yahoo's bloated, traffic-driven portal; it did one thing and it did it well.
The key is that none of the ideas were particularly new: personal home pages, search engines, and streaming media all existed in the late 90s, only now, a combination of dedicated engineers, improved technologies, a focus on usability, and someone else's money made it possible for some flavor of these to enter the public conscious.
So what's an established company to do? The conference you're overpaying for keeps claiming the future is in "social." Unfortunately, I'm answerless, here. A bit like Mp3s, Web 2.0 opened a Pandora's box of consumer expectations. People have come to expect a quality experience with few ads, and this simply isn't something most companies can afford to offer. The good news is that most of the obvious changes are already done and most of the displaced web 1.0 products are already deprecated. That said, this newfound focus on the user is fundamentally a disruptive market force, and while simply slapping a tag cloud or user accounts (with avatars!) on your product will make you more "social," it won't change the nature of the product.