Re: why hangouts doesn't have WiFi sms
To put this to rest...
Hangouts CAN:
Send/receive SMS to EVERYONE via your phone's radio (traditional SMS)
Send/Receive Hangout text video and picture messages to another Hangouts user... functionally identical to traditional text programs, but over your mobile data or WiFi connection
Send/Receive Voice AND Video calls to other Hangouts users over your mobile data/WiFi connection
... and a few more communication stuff (like group hangouts, etc).
You can send a hangouts message to someone via your desktop browser, etc...
The transition between SMS and Hangouts texts is seemless... and it doesn't lock you into the Hangouts messages like iMessage does.
What it can't do:
Make voice over IP calls to external phone numbers (yet).... functionality that everyone is expecting will be added to Hangouts at some point, current guess is that when they roll Google Voice into hangouts, we'll be able to do VOIP calls using your Google number.