I have both, and I do prefer Pages over Word. It fits my needs and is far easier and more flexible than Word.
However, I work in a PC centric work environment so Word is better for that in that I can open and create documents in Word without any issues whatsoever. Unless it has to do with work, I generally will go straight to Pages to create a document. Sometimes I create a document in Pages and then open it in Word and make the necessary adjustments from there so that it will be compatible with other co-workers.
I do hope that when Pages gets updated later this year that compatibility with Word will be a lot better, but then by that time Microsoft will probably update Office for Mac and make everything just as incompatible as ever.
Another thing that I love about Pages is that with iCloud, my documents are available to me on my iPad, and iPhone. I can open them up and work on them regardless of the device that I am working on. I have not come across any features missing in the iOS version from the desktop version, but your mileage may vary. That is something that is very lacking in the Microsoft programs. The new Office for 365 users is a nice first step, but very limiting and made primarily for the iPhone.
because of work, I am used to the Microsoft applications, but since getting my Mac 2 years ago, and getting an iPad when they were first released I am finding myself turning to the iWork apps more and more.