The Google Operating System blog discusses the next major milestone for Google Gears, enabling offline use of Google Docs:
Google Docs will slowly roll out an option to view and edit documents offline using Google Gears. Unlike the Google Reader implementation, Google Gears will automatically detect when you're offline and will take care of constantly downloading the changes so that your documents are available locally.
When you are offline, you can access your documents by simply going to docs.google.com or by clicking on a desktop shortcut. The documents can be edited offline and Google will try to solve the conflicts if your collaborators edited the documents while you were offline. "In the case where your edits conflict with another collaborator's, you will see [a message]. If you'd like to keep your changes, you have the option of copying them into the document. Also, you can click Show differences to compare different revisions and revert to the one you want," explains Google.
Google Docs blog lists some potential use cases.
I can't wait to see this in action. Apparently, you can try this out if you see an "Offline" link at the top of Google Docs (which I do not).