A little over a year ago I did a post about forwarding your godaddy email to gmail. This worked great for me for about a year, but I recently discovered that you can setup Google Apps for free on your domain and this is much easier to manage. I’m not going to document the process here, since their documentation is pretty easy to follow. It’s pretty much just a bunch of MX records to setup in your DNS.
Once you’re all setup, managing the whole system is super easy. Every account can have gmail, google calendar, google docs and google sites. Once you’ve got the email account setup you can forward to another email address if you want, or just use the inbox that they give you.