Even if Google isn't explicitly censoring it, Chinese censorship as a whole is going to severely limit either the knowledge of the 1989 protests, the number of websites that are willing to mention it, or both. That will inevitably have an effect on Google's results.
While there is definitely censorship around these events, outside expectations for what the [Tiananmen Square] query should return aren't the right standard.
To the outside world, the 1989 clashes are synonymous with the Square -- indeed, saying "Tiananmen Square" means the clashes as much as the place. But for China, it's a national plaza with a much longer history.
One might compare the [national mall] in Washington DC. There have been many large assemblies there, though the first page of Google image results doesn't show any of the mall filled with people -- an image many of us have seen, many times. (There's at least one such image on the second page.)
If there were at some point some focal "national mall incident", we would expect images of such incident to rise in [national mall] results -- but not necessarily dominate it completely.
Compare the results. There is 1 photo, compare that to http://images.google.com/images?q=tiananmen+square
Maybe this is a know your audience thing, maybe its censorship, I don't know.