If you have questions about the differences between Google Docs and Office Live Workspace check out this post from Inter-Alia, which compares the two. It looks like there are some significant differences between the two. For example,

First, unlike Google Docs, you aren’t actually working on documents inside the browser — you are using the Microsoft Office products installed on your computer. So when you log into your workspace and click New Word Document, MS Word opens up a new document. When you save it, the document is automatically deposited on your workspace online. Because you aren’t working on documents online, that means you can’t work on a document at the same time as others with whom you are sharing it — for them, the document will appear as “checked out.”

I have not played around with Office Live Workspace at all and I have played around with Google Docs only a little bit. However, I can say that I was up and running with Google Docs in about 30 seconds. Plus, Google Docs, just like everything else that Google makes, worked simply and without any problems. I can’t remember the last time anyone said that about any Microsoft Product.