It works a lot better than the POP implementation. Now you can actually have your account set up in Mail.app on your mac, and on your iphone, and have them sync everything between the two, as well as the web interface.
All clients will keep track of what has been read/unread, gmail "Tags" show up as folders on your iPhone/Mail.app, and moving messages into folders will tag the messages in the web interface.
Moving a message to the "Trash" folder will Delete it, and doing a regular "Delete" from your inbox will just archive it in Gmail. Very Useful IMO
Here's a useful link for setting it up
iPhone