For the unfamiliar, Twitter is a free 'micro-blogging' service which allows users to exchange short updates (up to 140 characters long), termed 'Tweets' in a way similar to SMS.
Unlike SMS, these updates are generally public (although private messages are possible). They are delivered via the internet to either the Twitter website or a separate client to a user's PC or mobile device. Any Twitter user simply clicks a 'follow' button to receive another user's public messages in their Twitter feed (becoming a 'follower').
Twitter has become an interesting social phenomenon, While many messages are simply status updates as to what person is doing at the time or a means of sharing interesting websites or online videos, others are used for exchanging information or as important alerts. One method growing in popularity is to use Twitter as a backchannel at events, to discuss the presentation and presenters. Other uses include distributing breaking news or emergency notices, providing customer support on products or even advertising jobs.
Considering how effectively SMS has been used in countries like The Phillipines to support the organisation of political rallies, it's no surprise that Twitter, with greater flexibility, has begun having an even greater influence.
Brack Obama used his Twitter channel to communicate his messages, attracting over 110,000 followers (John McCain only attracted 4,500 followers) according to Ariwriter.
Here's a video explaining more of the basics of Twitter.
If the PM is Twittering, should government agencies?
I'd advise extreme caution when considering Twittering officially in government. It is a narrow but deep channel which requires a serious commitment to be valuable.
As the tweets of users are not heard except by registered followers, if a particular user is silent for long periods, or blasts their followers with advertising, their followers will lose interest. Equally if treated as a monologue rather than as a social medium it's unlikely to be highly successful - although some news services (such as BBC World Service, CNN and News Corporation) as well as US Governors (who tweet their movements) have demonstrated that it can be effective for one-way information delivery.
Tweets remain 'on the record' - archived and findable online indefinitely, meaning that bloopers can be located by anyone looking up the person's Twitter account.
Public people and organisations should also be prepared to be watched and commented on, very often and very quickly, such as via blogs. The PM's Twitter presence has already been commented on in multiple places such as blogs, Welcome to Twitter, Prime Minister as well as traditional news media such as News Corporation and ZDNet.
Even name selection can be tricky - for example @10downingstreet is a spoof channel rather than the official Twitter account for 10 Downing Street.
Ultimately authenticity and listening and responding to other users is critical for most successful use of Twitter, which can be difficult for organisations with slow and complex approval processes for any public comments.
Some political Twitterers
Prime Minister Kevin Rudd - @KevinRuddPM
Opposition Leader Malcolm Turnbull - @TurnbullMalcolm