Good news! They've done a heckuva great job on it. The search field contains a drop-down list allowing you to search on all of your feeds, or within a specific folder, or even within one specific subscription. And of course you can search either your starred or shared posts.
Once you've entered a search term, a green border shows up around the main content area in Reader to signify that you are are viewing search results. There is also a tab added to the top right of the interface so that you can switch between your search results and your regular Expanded or List views.
The typical Google Reader Ajaxy goodness is there too, so you can scroll down your search results to your heart's content, and more results will continually load at the bottom.
Finally. A search feature from Google. What took you so long?
