I've been using Google Docs for academic collaboration too. Formatting is an issue, but probably something that can easily be improved. Of course, you shouldn't waste time formatting until the doc is done anyway. More pressing, since it doesn't interface with anything like Endnote, I tend to just get everybody to get the text in there and edited, then, when it's 99% complete, open it up in Word or OO, and do my formatting and references in an afternoon.