Google Docs' latest upgrade  makes the strongest case yet to skip Microsoft Office and collaborate with your group in your browser--especially when you're not in the same physical space. Here are five ways the new Google Docs helps your group get more done more efficiently, even when you're not in the same room together.
1. Reduce duplicate work and grow documents faster. GDocs' document editor now includes Etherpad/Google Wave-like character-by-character real-time updates by up to 50 collaborators. That means you get to watch the multi-colored, labeled cursors of your co-writers typing away in a single document in real-time, but don't write it off as just eye candy yet. Because you can see, down to the letter, what text your collaborators are writing, you avoid editing conflicts as they happen. Your group can grow a document at as many times the speed as you have participants. For example, in a meeting with five people, usually each individual takes his or her own notes. In a real-time editor, everyone can take notes at the same time and ask and answer questions in-document without interrupting the meeting leader. Same goes for conferences and lectures. Students, before that pithy lecture, get with your most trusted classmates in a Google Doc and take collaborative notes together. You'll do less typing and get better notes.
2. Replace your whiteboard with the new drawing editor. Co-typing is fun, but sometimes you want to show instead of tell. GDocs' new drawing editor lets you create flow charts, diagrams, and free-form drawings in what's essentially a virtual whiteboard. When you share your drawing with co-collaborators and give them edit rights, you can watch their updates to the drawing happen on your screen live, as they happen.
3. Chat while you write. Taking a play from Google Wave's book, Docs now combines chat and document collaboration into a single workspace. Unlike Wave, you don't chat inside your document; rather, an instant messaging panel appears docked on the right of your document. Combining conversation and co-writing into a single interface eliminates the need to switch windows between your editor and your instant messenger application. (This feature was available in Spreadsheets before the latest update, but now it's available in Docs and Drawings as well.)
4. Address specific bits of text with inline comments. Losing a reference to a specific paragraph or sentence in a linear chat streaming down the side of the page is too easy. But like Microsoft Word, GDocs supports in-document comments that look like Post-It notes stuck in just the right place, which can turn into mini-chats themselves. These comments include real-time, character-by-character updates too, and collaborators can reply to comments in a quick back-and-forth.
5. Ditch Microsoft Office for most documents. While Google Docs doesn't come close to offering all the advanced features of Microsoft Office, it fits the bill for most documents, spreadsheets, and drawings--and you're already using your web browser anyway. This week's update included features you're used to on the desktop, like a ruler with tab stops, floating images that you can drag and drop to relocate more naturally, and spell check as you type.
The bad news: the new Google Docs does not work offline with Google Gears anymore, and offline access will be disabled for all of GDocs on May 3rd. (Google will bring it back at some point in the future using HTML5). In the meantime, you've either got to export your documents manually to store them locally, or just get real comfortable keeping your data in the Google cloud.
To try out the new Google Docs features, click on the “New version” link at the top of any spreadsheet or go to the 'Document Settings' page and select 'New version of Google documents' in the "Editing" tab.