I used wikis pretty extensively for small-group online collaboration in grad school. It worked really well -- the only times we'd run into problems is when there were people in the group that didn't check the wiki regularly to see what everyone else was up to. But yeah, I'd recommend them highly.
Doubt you need a hosting service, but if you'd rather not deal with that part of it, we used wikispaces.com. Free. You can put a password on it. Works.