Like Paracleets said, you are harder to see, but not invisible. In PvP play, the fact that you are semitransparent and low to the ground can make you 'virtually' invisible in tall grasses and brush. On the other hand, this does not protect you from PvE mobs you may pass as you run from place to place. As a result, while helpful for travel, it is not very helpful in combat.
Playing both as Horde and Alliance shaman, the difference is notable, especially in battlegrounds. As a Horde, I am always on the lookout for any Alliance gnomes who may be around. Their tiny size makes them an extreme annoyance when hidden in brush since even their overhead markers are also much lower to the ground. Of course, as a result, when you take GW form, your marker as well is lower and as such more difficult to see. With good tactics, a GW could be almost as effective as a Gnome for surprise attacks.
However, while as an Alliance GW the Horde players tend to be on the lookout for small avatars exactly for this reason, an Alliance player may be less concerned about sneak attacks since their opponents are normally quite large and visible. This is one reason why Horde Druids and Rogues seem to be so much more effective against Alliance than their counterparts against Horde; though they are no less potent individually.
On the other hand, even as GW your Lightning Shield will twirl around your avatar if you have it up, negating the concealment if you aren't careful in picking a hiding place.
Edited, Jan 29th 2008 3:36pm by Vulpinemac