Can Google Docs be a serious contender?

I'm a huge fan of Google Docs, it keeps all my files in one place, I can work on a document from anywhere in the world without the need for a USB stick or issues of version control and it has brilliant sharing abilities! But i'm a simple user, I don't look to do complex formulas with spreadsheets or presentations with a lot of moving elements. So, how realistic is it that Google Docs could become a serious contender to take over as an office package and would we want it to?

We have recently rolled out Google Mail accounts to all of our 18,000 students and as part of the package they also have access to Google Docs. What will be interesting for us to see is what the take up is like and if students would rather use Google Docs than Microsoft Office? Also, if they do, how do we start to support them! At the moment Google Docs is an add-on rather than a piece of core University software and as such the only support is online or at the discresion of staff. Would we want to actively promote Google Docs to students? It certainly has more pros than cons...

At the moment it would appear that the US Universities are happy to promote the use of Google Docs to their students but the UK take up appears to be a little slower. Personally I view it as a tiny step toward the holy grail of 'cloud computing' and anything that points us in that direction has to be a good thing. But, will it take off? Only time will tell...

Have any Univesities out there started to promote Google Docs to students or are you adopting a more organic growth strategy?!