I've been writing up my semester paper for my masters. Thought I would go all out and use Google Document. It has been doing the trick so far (except it deals with footnotes in a quirky kind of fashion). One of the things I struck about 15 minutes ago and took, well 15 minutes to solve is the paragraph formatting tool. Most of your formatting gear is in the Format menu item as you would imagine. I set double space on my font and off I went.
Then I found that cute little icon on the menu bar (check the picture to the left) that has a setting "Add space before paragraph". Selected the space between the paragraph, selected the option and I was back in business. Tricky little "feature". Hope you find it helpful.