The difference here being WriteWith launching after GoogleDocs and it being marketed differently. Looks like WriteWith is creating a niche within collaborative doc editing, by catering to and marketing as a collaborative blogging platform. Brilliant concept! Truly catering to the long tail of bloggers!!
The incremental effort required to bridge the gap, seems minuscule, especially on the Google scale. One of the possible Google efforts would be, WriteWith getting an irresistible offer from Google. I am sure the founders won't be complaining then!