Google just released the new version of Hangouts, and now you can send & receive SMS with Hangouts. To enable/disable sending text messages with Hangouts do as follows:
1. Download and install new version of Hangouts (Download here)
Note that your device must be running Android 2.3 and up, and you may have to update Google Play Services as well
2. On the main screen of the application, tap Option Key and then select Settings.
3. Open SMS.
4. Mark "Turn on SMS" option to enable sending and receiving text message with Hangouts