I use quite a bit of software on diverse networks and multiple platforms, including OS X, XP, GoogleOS, Yahoo, web 2.0, etc. Some is extraordinary (Windows Live Writer, Gmail), some is very good (Nisus Writer Express, Microsoft Excel, Google Maps, Google Earth, iPhoto 6), some is mediocre (Office 2007, Blogger 2.0*, Aperture) and some is miserable (Microsoft Word, Blogger 1.0, iPhoto 1-4).
Google Docs & Spreadsheets fits into the mediocre category. When it works it works well, but too often it's slow or even unresponsive. That's barely tolerable in an email application, but it's unforgivable in a spreadsheet or wordprocessor. Google Docs and Spreadsheets only works for me in non-critical settings where there's a very strong need for document sharing and collaboration .
In the 1990s we thought we'd have a reliable high speed network infrastructure with low latency by the year 2001. Obviously that didn't happen. Technology has moved slowly, US markets have moved slowly, and a high level of "pollution" and "violence" on the net have reduced reliability even when the underlying technology has improved.
I think the death of the client application and locally resident data has been prematurely announced. The network isn't there yet, it may not get there for decades. Put me down as a "web 2.0" (once known as "application service provider") skeptic.
It's time to go back to paying for traditional locally resident software applications. Network data synchronization and file sharing - of course. Wide area network thin client - no.
* Google could make the BlogThis! bookmarklet functionality far better for me if they made it into a "submit draft then open post in Blogger editor" tool, but of course I'm a market of one. Blogger 1.0 was in the "miserable" category, so they've moved up.
 The cut and paste chaos on OS X is technically a platform problem, but it's a leading indicator of how immature these products are even when the network functions properly.