According to this post on Slashdot, Gmail can now import contacts. From the post:
First, a user must save their existing contact information as a CSV file in a place on their hard drive where they can easily find it. By clicking through to the Contacts > Import Contacts links at the top right of the Gmail interface, users are then given the option to import/upload their contacts CSV file into Gmail. And voila! When contacts are imported, Gmail automatically fills-in addresses as a user types recipient names into the address field.
So I gave it a try, and, of course, it works just as advertised. One caveat: I only imported about 10 contacts in a custom-created address book just to check the functionality and instructions. My address book in Outlook has about 500 contacts; I'll let you know when I get a chance to try an import the whole thing.
Now I'm waiting for Gmail to let me import all of my PST files and search them with the Google engine (of course, by the time I can do this, the Google engine better be able to search inside all of my attachments, regardless of their file type).
Let me know if any of you import a large address book and if you have any problems.