Vic Gundotra just announced what we've all hoped for (and kind of already anticipated): SMS is coming to Hangouts. Yes.
Aside from that, you'll also be able to share your location with a simple tap. Oh, and GIFs. Prepare for all sorts of animated crap in Hangouts. It's happening. Unfortunately, we're not exactly sure when it will be happening – there's no word right now as to when the updated APK will hit Google Play.