I've given Google Cloud Connect a run-through, and found it a nifty add-in for Office 2003, 2007, and 2010. It works from directly in Office, and serves a dual purpose, depending on how you plan to use it. If you're using it by yourself, it's a great way to save your Office documents to Google Docs, while also saving them to your local PC. That way, they're automatically backed up for you. In addition, you'll be able to access them from anywhere, on any Internet-connected PC. You'll be able to edit them, as well as read them, using Google Docs.
Collaboration is where it really shows off. Once you save a document to Google Docs, you can send a link to other people. They can then access the file, directly in Office. You can then also collaborate on the file, including both of you editing the file simultaneously, with changes showing up on each other's machines. There are built-in features ensuring you don't write over each other's work. You can also revert to previous versions. All in all, it's a great melding of the best of Office with Google Docs. It's far superior to Microsoft's Office Web Apps.
It's also Google's Trojan Horse. Clearly, Google hopes that many people will start to use Google Docs more frequently, now that they can integrate it with Office. Ultimately, Google will no doubt try to move people off of Microsoft Office completely, and onto Google Docs.
As for me, I'm sticking with Microsoft Office; it's far superior to Google Docs. But I'll be using Office regularly with Google Docs to get the best of both worlds.