Judging from the feel of the Gmail for iOS, it seems like an HTML5 version of Gmail is running inside the app. Designwise, shares the same design DNA as the desktop browser version of Gmail. Gmail
will also cache a select number of messages for offline viewing
(it will keep whatever messages you've loaded while online available until you refresh your inbox), and it claims that it supports notification badges, but what that means exactly is unclear (and at the moment, non-functional). It also appears that you can't run multiple Gmail accounts from the app, which sucks. But on the plus side, you do get threaded message view, full search capabilities, priority inbox and the ability to send attachments. If you wanna take it for a spin, the permalink page is live, but for the time being you have to download it through the iTunes app. [iTunes]
Update: Google has pulled Gmail from the App Store for the time being, citing technical difficulties.