Google Docs now officially supports importing scanned documents. What Google launched as an experimental feature for the Documents List Data API last year is now available on the upload page: check the "Convert text from PDF or image files to Google Docs documents", upload your scanned images (JPEG, GIF, PNG) or PDFs, and Google Docs will extract text and formatting from the scans for you to edit away.

Google is using Optical Character Recognition (OCR) that was developed by the Google Books team. OCR works best with high-resolution images, and not all formatting may be preserved. The original images will be included in the new document to make it easier for you to correct mistakes. Supported languages include English, French, Italian, German and Spanish, with more languages and character sets on their way.