I had the opportunity to use GoogleDocs during my first semester in the MLIS program. Incidentally, I was in a group with a couple of people who are in this class as well (you know who you are ;)). We had a term paper assignment for our LIS 5023 class and someone brought up GoogleDocs as an option. I must confess that, at first, I was somewhat skeptical about using GoogleDocs. I had never used it before and I thought that keeping our information out in the ether was risky. I thought "what if our information disappears?". Fortunately, my suspicions were proven to be unfounded, and we were able to come up with a great term paper. Our collaboration was made much easier and we had a great time using it.
Given my past experience using it, I can say that GoogleDocs is an excellent collaboration tool. It has all the necessary features to make a word processing, spreadsheet, or other documents that most office suites have. it is very user-friendly, and online collaboration is made effortless. We did not have a single problem using it.