I think most importantly, it depends on what you need a word processor for. If you're writting term papers are working in a corporate business setting, I would probably suggest Office. iWork can import and export files in Office formats, but not always error proof - especially with things like Powerpoint.
I think iWork is great for personal use or if you know you won't be exchanging files with alot of people. For example, iWork is great for people who may have a small business who can't afford a professional designer to create brochures or other correspondence.
Also, while Office isn't the slowest program, the current version is not universal; that is, it runs in the Rosetta 'mode' of intel Macs. If you're not familiar with universal versus non-universal program, bascially non-universal programs were built for the older PowerPC processors Apple used to use. These programs still run and often work great on new Intel Macs, but they are a little slower than native universal programs designed Intel Macs. The reason I bring this up is because iWork (a universal app) will probably feel faster or snappier when you're using it versus using Word (which is a non-universal app). It's a very small difference, but one that would be noticeable if you were to use both programs side by side for an extended period of time. The new version of Office coming in 2008 is supposed to be universal.
