If I recall correctly, "Groove", which is a part of the Office 2007 suite supports this kind of functionality, but I *LIKE* the idea of not being dependent on the machine for my documents. All I need is one of the two major web browsers( it appears that Opera is not supported yet) and an internet connection. Log on, create a document, when you're done, save it to local storage if you choose (in a variety of formats), print, or just leave on the server for later editing and log out.
Collaboration, revision history, spell checking, simple to moderate formatting (including image insertion), it's all there. Everything that 90% of the userbase of Word uses. Free. At least currently it's free. Google has the right to change that policy at a whim, but for now, it's a great FREE product, with Google's "don't be evil" motto and technology backing it up.
To put a twist on a famous advert:
Audience: Google is listening