We use a wiki - specifically Confluence by Atlassian.
It's a commercial product, and it's great. One of the reasons we picked it over free/open wiki engines is that it has a full-blown WYSIWYG editor and various other features that make it more easily accessible to users who are familiar with Word.
We've also come up with a neat trick where we store images, designs, wireframes, etc. in Subversion, and then embed links in the wiki documents to those resources URLs via the Apache/SVN web interface module; notes on how we do this are here if you're interested.
