How well does Google Docs work on the iPad via Safari?
Google Docs has full view and edit functionality on the iPad (see here and here). To be honest though, it's kind of like trying to chop down a tree with a plastic spoon. It feels quite clumsy, it's fairly slow and it's not something you'd want to be a regular part of your work flow.
There are Apps like GoDocs that claim to make the experience better, but I haven't tried them myself.
If you don't have an iPad (and I'm presuming you haven't because you're asking this question!) you can get your Mac or PC to pretend to be an iPad in Safari and try it out yourself. Fire up Safari's preferences and tick the show develop menu under the Advanced Tab:
Then use the Develop Menu in your Menu Bar to set your User Agent to Mobile Safari 3.2.2 - iPad. Your browser will act just like it was an iPad, which lets you experience with Google Docs or any other sites you're curious about.
Current situation is much better than the one sketched in the answer of Tuaw although some essentials are still missing. Basic editing works, including font types, headers, bullets, numbering. So you can definitely write a nice piece of text. Compared to the desktop browser experience however, many features are missing. Tabs can only be inserted with an external keyboard, tables cannot be created at all (viewing and editing the contents of an existing table is possible), multiple columns is impossible, etc. It is impossible to use the desktop version of Google Docs in a browser on an iPad. So the Google Docs iPad app is useable but you will probably have to make certain changes on a laptop or desktop machine if your document is more than a simple note.