How does etherpad (acquired by google) compare to just using Google docs? Recently went through an interview with Google where we used a shared document, it was a horrible experience. I remember thinking that no sane person would code with a plain text editor and there should be a better way to do it. The ideal service to me would be something like a web based collaborative emacs.
We've tried using google docs for interviewing, and found that the code will not always sync. The remote developer would tell us "here's my code, it's ready", and we would see a blank doc for like 5 minutes.
Etherpad (and its clone instances) is awesome. Never had a problem.