BTW, only your Gmail contacts. For now.
It's funny, this Google-Twitter connection. I know of at least two Google alumni who have gone over there. When I step back and take a wider view of the bigger picture, I see a scenario that shows a real collegial closeness between Google and Twitter.
As entrepreneurial as the Twitter folks are, and as strategically acquisitive as the Google folks are, I sense the inevitable. I can't say when, or for how much, but write this down.
Google will buy Twitter. In fact, they should.
I can imagine Twitter functionality being appended to GoogleTalk, and perhaps even to Google's newly acquired GrandCentral.
What about a clickable Twitter icon, say as a configuration option in Caller Settings as shown in this sample GrandCentral box?