TitanPad is a free and simple to use Web 2.0 tool that lets a group of people (up to 8 authors) come together to easily create and edit documents. It does not require a user account.
You can import other text documents into your pad and they can be downloaded as PDF, DOC, HTML or text.
TitanPad has many possibilities for classroom use. For example, it allows teachers to create their own working space. Students can access the document at the same time or individually at any time. In this case, each person, who is color-coded, can see the changes that others are making.
Nathan Hall's video guide: