I like pages, but it is weak in some key areas. gauchogolfer finds the grammar check function 'poor' - I would only say that if I relied on it too much. It is useful, for example, in identifying grammar errors prior to reading a draft. I find that really helpful. Of course, you have to take the suggested corrections with a pinch of salt. I'm saying I think the lack of grammar checker is a serious drawback (especially for undergraduates, and they NEED it). Apple could make a grammar checker that offers more in the way of style guidlines than MS Word. For example, I wish MS word could recognise bibliograpies. It's such a pain in the ass to click continue a hundred times while it tells you eg Lakoff, George. is a 'fragment!'
Pages also, as I said upon release of 2.0, needs to be able to handle footnotes and endnotes in a single document. Granted this is not a majority request--but it is needed in some academic fields.
You can search me and find out how many times I've said this: if you need images in your document, Pages is by far the best. Also, it selects much nicer fonts than MS Word - I hate those effing serifs!