My first few hours with offline capability in Google Docs has been a little rough. On one PC, it didn't work at all as advertised. On another, it works, but there are sometimes confusing quirks and holes.
Google is rolling out offline functionality in waves to Docs accounts. When yours is activated, you'll see this image in the upper right corner:
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Clicking Offline will prompt you to install Google Gears, or allow Google Docs to use it if you already have Gears installed. Once Gears is installed, Docs will synchronize your documents between its servers and your browser. I found synching to be pretty quick -- 192 documents took only about two and a half minutes to synch on my office connection. Once you're set up, you can access docs.google.com in your browser even if you're offline. You can make changes to existing documents and, once you reconnect to Google's servers, those changes will be saved to the original document.
TROUBLE IN PARADISE
That's the theory, at least. My experience on my ThinkPad X40 was different. Google Gears installed fine on Internet Explorer (it doesn't seem to support Firefox 3), and when I reconnected after making changes offline, everything seemed to synch up properly. But the changes never made it to Google's servers. I could see the changes any time I viewed the document in Internet Explorer with my notebook. But if I looked at the document on another browser on my notebook, or on a different PC, the changes weren't there.
Google's troubleshooting instructions recommend removing Google Gears and reinstalling it. I tried that on my notebook to no avail.
When I went through the whole process on my desktop PC at work, everything worked as advertised. I could edit offline, sychronize and see my changes in other browsers and on other PCs. There were a few things missing from the Google Docs experience, though. For one thing, the message inviting you to install offline access promises that it will work with documents, spreadsheets and presentations.

In fact, it only works with documents for now. But Google has been very up front about that, so that wasn't a huge surprise to me. Some of the other missing features were a little more surprising. Here are the things you can't do offline:
-- Create a new document. (If you plan to use offline capability a lot, it probably makes sense to create a few empty documents you can use whenever you're offline and want to start something new.)
-- Look at the revision history of a document.
-- Change to a different document style. (Document styles change the font, font size, spacing and other formatting for the entire document.)
-- Insert a picture (though you can insert a link, table or comment).
-- Check your spelling.
From my experience, Google Docs offline capability still seems like a rough beta. I think I can live without -- or work around -- most of the functionality that's left out of the offline experience (though if you can't spell, your feelings may differ!). But it seems like the mechanics of making Docs work with Google Gears still need some massaging. Let's hope this is a beta that Google's committed to fixing. Once it works well, I think it could be a real boon to lots of people. Of course, some people disagree.
As with all first releases, there are some minor glitches. I think the innovators at G will quickly come to the table with some great fixes that'll enhance the G-Experience handsomely. I myself usually wait a few days after a release(my sit-back & watch mode, T-wolf wariness)before I jump into a program looking for the exciting climax of a successful endeavor.
I've found MS Workspace to be accurate and trouble-free, and superior to Google Docs, offline or online. Yes, one must have MS Office to process the documents, but the up- and down-loading works very well. Only one person can edit a document, whereas many can in Google Docs, but the value if full Office capabilities overrides that benefit, IMHO. There are still far too many incompatibilities between Google Docs and MS Office for Docs to penetrate the business environment. And there, everyone has MS Office.