I think it depends on
- How heavily into writing the specs you all are
- If you're likely writing at the same time
- Whether you intend to publish the specs.
Google Docs is nice and easy to get started with. It's also great that you can now export folders all at once. Still, for something that's going to be published to the web, a wiki or general cms is a better presentation vehicle. A wiki will also integrate with your existing site.
If you've got small specs, primarily written by one person then use whatever tool is available where you're hosting the project code or website. If you're not likely to be editing at the same time then a wiki is good.
I've done the wiki thing, the passed document thing and the Google Docs thing.
- The wiki thing has a low starting effort and lasts a pretty long time. At a certain size it does get to be a pain.
- The passed document thing (writes, email, edit, email, etc) only works while one person is starting everything up. As soon as there are even minor edits then it sucks.
- The Google Docs thing is fine until you have several docs and several editors or want to publish it online.
hth