I'm looking for a solution to a fairly everyday problem in MS Excel if you don't use it just for raw data. Data validation and selection using in-cell drop down list (see image)

I've checked online services a while ago and none of them actually supported this. To make this work spreadsheets probably need to support named ranges as well. Since Google spreadsheets now support all kinds of custom functions that can be used and manipulate spreadsheets I wonder whether this can be/has been done?
Why don't I just use Excel?
Because I also need simultaneous collaboration which is very good with online spreadsheet services but actually quite a pain with Excel files. It usually works on per user basis so only one user can have the file open in write mode, all others can only read it. This is not really an option.