At first blush, integration appears quite good. You create an album by first selecting photos from your Picasa library, then pressing the Web Album button in Picasa. It couldn't be simpler. Album titles and descriptions transfer over automatically, but you can easily change them if you want. The albums get nice, human-readable URLs, and sharing them is a snap. Other Picasa users can download images (if you allow it) into their own Picasa libraries. And the Web pages that Picasa Web Albums creates are very clean and easy to navigate.
But there are small snags. While albums on Picasa Web Albums can be made either public or unlisted, there's no way that I saw to password-protect them. And although Web Albums will display slide shows, captions that you attach to photos don't show up in them.
But I have a bigger issue with this service: it's one way. Once you upload photos from Picasa to Picasa Web Albums, there's no link between them. If you write a caption or delete a photo on your PC, nothing changes on your online album (or vice versa). I'm spoiled by the technology of Sharpcast and Phanfare, both of which feature live synchronization between media files on your PCs and your online albums. I think synchronization is the only way to go if you're going to have the same images online and on your PC. I'm disappointed that Google did not more tightly integrate its Picasa software and Web service.
I'm also surprised that Google is being so stingy with online storage space for photos: Free accounts are limited to 250MB. That's adequate for a bunch of slide shows but it's not enough to be a serious online photo storage solution. Oddly, Gmail, which is also free, gives you 2.7GB to play around in. If you want more photo storage, you can get 6GB online for $25 a year. I don't think that's a very good value, and it's still not enough space to store a typical family's picture archive (Phanfare, one of the few photo sites that charges for storage, costs $55 a year but provides unlimited space).
I was hoping for more innovation and a richer feature set for Picasa's online product. On the other hand, for current Picasa users, I don't know of a simpler or faster way to share photos.