Googel Apps and Outlook work just fine for me. I use the Google Sync application on my computers and on my BlackBerry. IMAP mail through Gmail allows me to access my mail from any computer that I am on and the calendar sync is very good. Not great, but very good.
It lacks contact sync and task list or task sync. The calendar sync application hangs on the PC from time to time. You also don't want to try to mesh an existing Google calendar and an existing Outlook calendar. You will end up with a lot of duplicates and even a few missed entries.
I cleaned up my Outlook calendar, started with a fresh Google calendar and haven't had an issue with it since. I can add appointments from anywhere and everything stays in sync.
I use Plaxo but only for contact and task list sync with my main desktop workstation and notebook. I then sync the BB to my desktop for daily backup and to get new tasks and contacts over to that. This allows me to add contacts or tasks from any device and everything there stays in sync.
In short, I give Google $500 a year for my 10 users. I used to pay my hosted Exchange provider $150 a month for the same 10 users. Is it the same? No, it's not the same. Is it good enough? For my small business it is. And it gets better as time goes on.