Yes - you can convert - Word to Pages, Excel to Numbers, Powerpoint to Keynote - just by opening them from within the iWorks application. Most of the time, it is a simple conversion except that Numbers does not read Excel Macros and not all Powerpoint transitions and features work in Keynote.
When sending Pages docs to others who may only have Office, I typically send them as PDFs. Pages docs may also be exported as Word docs, Numbers as Excel and Keynotes as Powerpoints, but, again, especially with Keynotes, the transitions may not map over correctly.
Personally, I find Keynote presentations much more satisfying to create and deliver than Powerpoint (still comparatively clunky). Pages does everything for me that I need although not everything that Word does. The weakest link is Numbers - without macros, diagonal or vertical text and some functions it is more limiting as an "Office equivalent" than Pages and Keynote. that being said, the charts are easier to create and edit.
Communicating with other Apple devices is a no-brainer if you Pages, Numbers and Keynote for iPhone/iPad. Even better yet, once iWork in the Cloud is out of beta it will be even easier.