I am having students use Google Documents to write their assignments and then share the document with me. I can grade them at school or at home and can type my comments right into their document.
You can also open up the Google Doc and share it with classmate partners or teams of students for peer review. Google Docs will actually track the changes each Doc member makes, so you can even grade students on the quality of their editing by going back and looking through the history of each revision on an individual contributor level (sort of like what you can do on Wikipedia when you check the history of a wiki).
Good stuff, Kax!