An interesting review from Simon Jones about Google Apps
To quote his conclusion:
With terms and conditions running to many pages, including clauses that say the company can change the terms at any time, without telling you, we would be very wary about entrusting any of our data to Google. £25 per user per year is a fair chunk of money if you look at it long term. Over three years it is about half the cost of a single OEM licence for Microsoft Office 2007 Small Business Edition and that gives you an awful lot more functionality. Other packages, such as OpenOffice, still have more features than Google Docs, but are completely free.
All in all, Google Apps look far too simple, unfinished and, as Dr Johnson said: "Like a dog walking on its hind legs, it is not done well but you are surprised to find it done at all."
If your requirements are relatively rudimentary, with your documents consisting of plain text and little formatting and if you are happy to risk all the restrictions, possible breaks in service, or loss of confidentiality - then Google Apps could be right for your company - but if not - there are other, far better, solutions out there.