A buddy of mine had that set up back in August, but his site was hacked and so he sold out to a directory. I wondered how well it worked. Is the mail served up from your site? In other words, does it look like any other mail service only it's hosted by Google, or when they check there mail, do that have to leave your site to go to Google's?

There are two ways you can set it up, one you use an existing domain, leave it where its hosted and just change the MX records to point to Google servers, so the only part of the service Google host is the mail services. This option can be integrated to your site and keep the user on your site etc. It is very complicated and Google will not necessarily approve your site for this service, the good thing about it is that you can find a way of keeping the users on your site etc.
The second option is to buy a domain from Google just for this service, with this option your service is set up with a few minutes, its hosted by Google including "www" part of the domain, you can then do whatever you like with it.
You will the following urls set up for you (using haabaamail as example)
www.haabaamail.com - Welcome to HaabaaMail, the FREE email service from Haabaa.comÂÂ* (You can make this look better than this)
http://mail.haabaamail.com
http://calendar.haabaamail.com

There are several limitations to the service though, you can find out more on the blog I did on it here: Temi’s Internet Blogs the biggest of the limitations are:
* Maximum of 250 users allowed
* No automated signup, you have to create each user manually.
* You cannot make the service look like yours, there are looooooads of Google branding everywhere most of them you cannot remove
* The browser URL changes to Googles url, you get something like: http://mail.google.com/a/haabaamail.com/