Emoticons (Smileys) in Gmail

Today, as I was reading a friend's email, I noticed he had used smileys in his email. It was surprising as I had seen people attaching images with the email, but emoticons? And that not attached but embedded in the text itself.

Curious to know more about it, I clicked on the "Compose Mail" button and saw the "Insert Emoticon" button lying there in the formatting toolbar.

Clicked on it and saw a sea of smileys lying underneath, lively in motion, waiting to be clicked. And what more, they were available as "square" and "circular" smileys.

Now, this is one nice option I had wanted since a long-long time. :)