SMS support is something that has been promised for a while, and now you will be able to use Hangouts to send and receive text messages as well. We're assuming this update is only coming to Android, because of the iOS restrictions though. Beyond that, there are a lot more updates coming to Hangouts on both platforms.
In the messaging side of the app, it will now be very easy to share your location with someone in a chat. There will be a pin icon which will grab your location from Google Maps and share with someone. Google is also adding support for sharing and playing animated GIFs right in the message stream.
On the video side of things there are a number of cool enhancements. Gundotra has said that starting today, Hangouts on all platforms will support HD video streaming. Google is also adding the auto-awesome experience to Hangouts videos to help adjust brightness of webcam streams, and beyond that there are a number of other improvements planned, but it is unclear if they are coming to mobile right away like altering colors, and focus in a video chat.
The updates aren't live just yet, but when they are, they'll be at the source links.