Short answer, yes. If sync is enabled, and you opt to save a password, that password will be sent to Google's servers. That said, the data is encrypted, and access to it is limited.
By default, Google encrypts your synced data using your account credentials. Google indicates that this data cannot be decrypted without knowledge of your password, and that in fact, when your credentials change, all synced data must be deleted from their systems, and can then be re-synced from your devices (and in the process is re-encrypted with the your new credentials).
So, if everything is working correctly, Google themselves can be trusted, and the Google infrastructure is sufficiently secure to keep interested third parties out (read NSA, criminal hackers, etc) then your data is safe. That said, however, Google still has the capability to decrypt your data, though they don't make that known. This is simply the result of them being party to the creation of the cipher key (your credentials), leaving them in a position to save and potentially misuse the keys.
This level of trust is more than I would want to place in them, so in this situation, I would choose not to save passwords or sync data to their services, but that's just my preference. Only a fool trusts everyone, but only a bigger fool trusts no one.
Best Answer
why don't you use KeePass Password Safe?
it works with Google Chrome. much safer than storing passwords in a browser.
Edit:
KeePass features includes Auto-Type, Global Auto-Type Hot Key and Drag&Drop
KeePass is free open source software, a portable version is available.