Google Applications can be implemented at a domain level for k-12 education.
Retrieved from ISED-L list-serv 3/09, CC3.0 a, s-a, nc license
List of schools using Google Apps compiled by Lucy Gray: http://spreadsheets.google.com/pub?key=pfr2_hjQxlJb76nqluop3Gg Submission form to add your school to the list above.
E-mail is indexed for content, but targeted advertising can be disabled through the admin tool. If I remember correctly, I think that is the default.
Postini services (not free but very featureful and reasonably priced) round out the administration piece, including forensics.
Google Gears allows you to cache local copies of your e-mail, calendar, and docs so you won't be without them if you lose internet access or the Google services are unavailable for some reason.
Google Apps Education Edition allows schools to add their logo in place of Google's in the upper left of all Apps. That's as much branding as we need.
I've found the Google Apps suite to provide the collaboration tools that we need, not much that we don't need, at a price that's hard to ignore, with little real downside that I can see. Moodlerooms' ongoing development of Google Apps integration with Moodle(provisioning, SSO, Google Apps blocks, etc) makes the two platforms even more compelling than they were alone.
Google apps compared to FirstClass: http://docs.google.com/Doc?id=dfvzx67g_5gjd2zfgx