We used Google Wave this past weekend during a practice for January's Mystery Hunt. It was an interesting experience, but Wave needs better group support before it's really usable for large-group collaboration. Further, wave threads with lots of discussion start becoming unwieldy: what usually ends up evolving is a collaboratively-edited document/summary/link forest on top, and lots of discussion and comments trailing off below. This forces you to keep scrolling between the "useful stuff" at top and the end of the comment thread, rapidly vanishing off below. The terrible scrollbar implementation doesn't help. This seems like a basic UI problem — and one that wikis have to some degree, too: anyone who's done any collaborative editing of a wiki knows the temptation to insert little inline comments, which spawn discussions that threaten to overwhelm the text. I suspect the solution is some sort of split view or toggle so you can keep an eye on both the discussion and the document at once — think of the little chat window integrated into a collaboratively-edited Google Spreadsheet, but with history and linking and all that wave goodness.
So, as presently constituted, the web Google Wave app is Not Quite There Yet (there are also some instability, compatibility, and slowness issues, but they seem more straightforward to solve). But the underlying Wave technology remains very exciting, and I believe it's something Sugar should build on, as I've written before.