SMS to Email: http://www.youtube.com/watch?v=Ka3T0RXwIbw

I use this and on the whole it's very reliable, however sometimes messages seem to get lost. Maybe if they're too long, it's not 100% clear to me.

You just go to GV settings and check forward all SMS to gmail. From there on all your SMSs go to your Gmail account for you to read and reply. I have Boxcar which notifies me of a new SMS via a pop up in which I then go to the iPhone's mail client(configured it to work with my gmail) to respond to the SMS.

Not exactly sure how he has it set up, but in Settings -> Labs there is a Google Voice player gadget and two SMS in Chat gadgets.

although you can reply to a sms from gmail, there is still no way to initiate a sms converstaion directly from gmail.

There is, I have plenty of saved Joe Schmoe (SMS) email addresses in my address book now. Writing a fresh email to this address sends a txt.

again, that person had to have text-ed you for you to be able to reply.

Yes there is.