I have used Google's group application as a collaboration site on three very large scale software projects in the last 6 months. It works really well!! There is a simple file sharing repository, page creation and user administration with varying levels of access and update.
The coolest feature is the messaging component. When users reply to notes through the system it tracks responses and keeps a record of the dialog. Giving stakeholders the ability to communicate this way is very beneficial. One feature which seems very obvious but is missing is integration with Google documents, another favorite application.
Using the file sharing application makes it so incredibly easy to keep the client on track with the project deliverables and milestones. All the revisions and notes are stored in a central, accessible location which greatly serves to reduce time wasted on explaining why things happen the way they happen. When the progression of the project is right there for everyone to see everyone benefits.
Setting up a Group is about as easy as setting up a Google email account. Once you have Gmail check out the groups here!