Speaking as a college professor, you ought to buy Office. If you will be writing academic papers, you will get more done with the advanced features of Office. I couldn't have written my dissertation without it, and my dissertation was just prose (no equations or anything like that).
Office 2004 really is a first class piece of software. I have never had any trouble with it (or the three previous versions). I dislike a lot about Microsoft, but as a Mac developer they do pretty good work. I have owned the last three versions of Office and I have been more than pleased with all of them.
If you are going to be giving presentations, then Keynote is clearly superior to Powerpoint. It's pathetically easy to get really great results in Keynote, whereas with Powerpoint, you really need to work at it. If you like Jobs' Macworld presentations, then Keynote will let you do exactly the same thing with minimal effort.
So if you are going to do presentations, then it would be worth buying iWork as a supplement to Office. You will get sizeable discounts on both as you are a student.