Is Google Spreadsheets / Docs a viable database option for real-world applications?
Without knowing what this application does, I'd say no. Simply on the basis that a spreadshet != a database.
no, a spreadsheet and a database are distinct concepts. Spreadsheets do not allow you to query the data. Spreadsheets (especially "hosted" like Google's) will not support real world load.
Depends on your application. As a database, typically not. It can be useful in instances where you need "Excel With Web Features" or as an alternative to a database.
Especially now that Spreadsheets, Presentations and Docs are all basically used under the "Google Docs" moniker, the entire "Google Docs" suite is best used as the sum of its parts.
Two examples:
Web forms. Create a form using the Forms application, and all its entrants are stored in a Google Spreadsheet. Personally I've found this to be a pretty quick and easy way to collect names and contact information online, and its all output into a very easy-to-use and portable format.
Using the spreadsheet to interact with other web content. See this example of displaying and grabbing content from Wikipedia for editing: http://ouseful.wordpress.com/2008/10/14/data-scraping-wikipedia-with-google-spreadsheets/
You might see for MySQL, PostgreSQL, SQLite to use in applications, for example, to archive my books.