The free version is still available, but if you pay for the service you get 24/7 phone support, a 99.9 percent uptime guarantee for e-mail, more online storage space, and other business-friendly features. You also can make it appear that Google's services (like your e-mail) are on your own Web domain, and Google makes it fairly simple to do so.
But let's be clear about one thing: While Google Apps has a lot of potential and may ultimately challenge Microsoft Office as a desktop suite, it is simply not there yet. The word processor and spreadsheet can't exchange data, for example. The spreadsheet has no graphing function. And there's no presentation program (PowerPoint competitor), although there are indications that Google is getting close to releasing one.
On the other hand, Google's communication and scheduling tools (Gmail, Google Talk, and Calendar) are very strong, and the mobile versions keep getting better as well.
Nobody doubts that Google will continue to add features and programs to its suite. And if you don't need charting or PowerPoint--and if you're comfortable storing your business' data on Google's servers--Google Apps is highly functional. It's also much easier to share files and collaborate on documents with Google than it is with Microsoft's baseline suite (unless you pay for Sharepoint).
Both companies also are competing in Web hosting and other services. Google integrates its rudimentary but solid Page Creator app into its online suite. Microsoft has a rich suite of customer-facing and back-office online services called Office Live, but these apps are not integrated into the desktop Office suite.
Here at Webware, we use Google Apps when we need to collaborate on documents, and sometimes when we need to bang out a quick story and don't want to fire up a full Microsoft app. But it hasn't replaced Office for day-to-day document creation. Yet.
Caroline McCarthy has the business perspective on Google Apps on News.com.