The proper use for Google Voice is to give you a new phone number for life. Google gives you a number that you give out to everyone. That way if you ever get a new cell or home phone number you don't have to give it out, you just update your Google Voice account. For incoming calls to your Google Voice number, the number can be routed to your home, work or mobile phone depending on who is calling and what rules you have setup. When you call out, you call through a proxy number so that instead of your cell phone or home phone number showing up on the caller ID of the person your calling, the person will see your Google Voice number. It also centralizes your voicemail into an interface similar to GMail where you can read or listen to voicemails. It can also route ingoing and outgoing SMS messages. It doesn't get rid of the need for a mobile plan, it just helps route your phone calls better through a phone number that you should always have.
That is how it works if you use it to it's full extent. Some people (like me) use it just for Voicemail for our current number as it provides a very nice Visual Voicemail system with text transcriptions of the messages.
Also, if anyone needs a Google Voice invite, let me know. I just got 7 of them this morning.
