I use Google Apps for a non-profit organization that I run. Why? It is completely free for me to use the base applications. I would much rather use Office 365, but we like to see the funds collected by our organization be spent on our organizations goals.
As the Technical Coordinator of a small, non-profit school, I use Google Apps for education because it's free and it's an excellent product. However, I don't think I would have recommended it for this organization if we had to pay for it. We certainly would not be using Exchange or Office 365.
Since setting it up just over a year ago for our internal, administrative use, we have expanded it to the entire student population. The document and calendaring features have transformed how we operate for the better and communication with our student population has improved dramatically. Every issue I've had with it (so far) has been fixed in a few months with seamless upgrades.
On the flip side, I also do freelance consulting work and use the free version of Google Apps for my business.
I recently tried to set up Office 365 for a client only to have its system fail repeatedly. It refused to recognize DNS settings and therefore refused to accept e-mail for the domain. I had to migrate the client to Google Apps and the entire process cost us both money, headaches and lost e-mails. Sorry Microsoft, I tried.
Yes we use Google apps. We were forced to change by administration. No one likes it. Matter of fact, everyone hates it. It's like going from that Cadillac you were talking about to a Kia. Everyone wants Outlook back.
As we speak I am migrating (automatically with the nifty email migration interface) about 33 GB of current and archived mail from Gmail to Office 365 Exchange Plan 2 (the one with a 25 GB mailbox and gratuitous archiving). I have been archiving personal and business mail to Gmail via IMAP for over a year and I have been really pleased with the concept and Android integration. But I think Gmail e-mail formatting stinks and, quite frankly, think Google is slimy about privacy. Plus, I prefer the Outlook-Exchange user experience and performance.
I think Google and Microsoft are going to stay pretty close in features and price for the foreseeable future, so it comes down to who I want to do business with...and my preference is Microsoft.