Both tools let you save documents online and share access so that many people can help write and edit a document. In fact you can all look at and edit the document together if you want.
I am a bigger fan and more frequent user of Google Docs, so I’ll focus on their service.
You can upload any of the following types of documents:
DOC, XLS, ODT, ODS, RTF, CSV, PPT. You can control who has access to your documents: everyone, no one, or folks you approve.
It is very much like having a shared server to store documents. A slightly upgraded version is Google Apps, which is even more like a share server with shared access for small organizations.
I hope that’s helpful!