Once on your screen, you can edit documents while on the go and share them straight from your Android handset. And with the app and the camera on your phone, photos with text can be turned into an editable Google document using optical character recognition. Create new documents from just snapped pictures and old shots from your gallery can be converted by sharing them with the app. Google's own blog notes that there are some limitations such as the inability of the app to read handwritten text or some fonts. But the Mountain View company did say to "stay tuned-things will get better over time."
source: GoogleMobileBlog via AndroidCentral
Google Docs is now available as a free download from the Android Market for Android phones running 2.1 or higher