Definitely Microsoft Office
I have both Office and iWork '05 on my PowerBook, and I almost never use iWork. Here's why:
(I) Pages DRIVES ME CRAZY. I can't stand how there is a lack of "toolbar" on the top, and as a result, there are too many floating windows. Believe it or not, Word makes it A LOT easier to type/work with.
(II) Keynote is almost useless (for me) because when I do presentations, I need to forward it onto a Windows-based PC, and it can't read the Keynote. Therefore, I almost rarely use it unless I'm actually bringing in my PowerBook.
(III) It's really an "incomplete" but nice attempt to capture some potential Office customers. it just isn't "polished" enough, but given my experience with Tiger so far, it should be good in the future
So by ALL MEANS, opt for Microsoft Office. It's pricier, but again, you get what you pay for, really.