I just logged into Gmail and noticed that the last note to sync was from 6 days ago, even though I have newer notes on my iPhone.
When I try to test it now by deleting, updating, or adding a note, it does not sync with Gmail. I have 355 notes on the iPhone, and 350 in Gmail.
I seem to recall that after pressing the done button in the Notes application, the working indicator would appear showing that there is network activity (i.e. that it's syncing with Gmail). It no longer shows the spinner when I press "Done".
I tried restarting the phone to no avail. I tried deleting an email in Gmail in case there is a 350 limit, but that didn't help either. I also tried deleting notes on the iPhone so that it had less than 350 (in case the iPhone had a 350 limit), it didn't solve the problem.
I didn't change anything with the account setting on the iPhone nor on Gmail. I'm running an iPhone 4 with iOS 4.2.1. My iPhone is connected to the internet via Wi-Fi.