Google Docs is a great collaboration tool. I use it in my work, with a writer's group I facilitate--Deadwood Writers-- and for personal use. In fact, as I work through 23 Things I'm keeping a record of my thoughts in a Google Doc. Which is why you see so many rapid posts :)
What's also nice is that the files can be exported in a variety of formats to share with others. Great tool for students to use. They can make the teacher a viewer to track progresss, or a co-user to post guiding comments and questions. Students have email of their own, particularly middle to older kids. Younger kids could, with parental permission and monitoring. It's a way to get them writing.