I agree that you should, if you can afford it, get MS Office. And don't rip it off. Dude, that's just wrong. The student price is a phenomenal deal for what you get. Regardless of what you think of MS, the Mac division is staffed with some pretty cool people. And they've made Office 2004 a great product.
It will work with the 95% of the world running it on a PC. It'll do anything you need it to do. The new features in Word are great if you're note-taking on a PB.
I'm a Mac person, through and through. But I appreciate a good product at a good value, and MS Office is just that. If you get something else, that one time where it needs to be in Word format (or whatever) and your open-source app doesn't quite work, and you're late with your project... that £100 would seem like a bargain.
As to those who say that Appleworks would be praised if Apple'd just update the GUI:
They aren't going to. They haven't really worked on it for years. They don't need to. Newbies/non-demanding users are fine with it. Demanding users use Office. If Apple came out with a kick-ass version of Appleworks, demanding users would still use Office.
But... agreed, it does the job if you don't need to work with others. If you're just writing your own papers, you'll be fine with Appleworks. You don't need the power of Office. But you'll likely need it to collaborate with others.