I've seen this argument over and over again, and as far as PC replacement is concerned you and everybody else who makes it is right.
However, you're all missing the point of the iPad and iPhone and why they are growing for businesses.
First, iPhone has already been adopted by businesses and is the dominating force as far as enterprise smartphones are concerned. The primary concern here is email, calendar & contact access. Nobody is editing documents on 3.5-4" screens and they're not relying on them to view documents either. Existing apps that allow users to view these documents in a pinch are more than satisfactory.
Some people view the iPad as a replacement for a PC, others don't. Many view it as an additional piece of equipment and issue both a laptop and an iPad to their employees. More common however is employees buying their own iPads and using them for work, also called BYOD. They seek out the applications they like and use them as they please. Software choices are not forced on them by their IT departments.
iPads that are issued by companies are often used for things other than what conventional PC's are used for. They give the user access to an entire library of things like catalogs, PDF documents, photo galleries, video demos and the like. The devices are much easier to use for sharing things like these with customers and partners than a laptop could ever hope to be. The battery lasting all day long is a major positive as well.
A lot of companies issue laptops to employees instead of desktops now. This way the employee can have a full PC while they're at the office, but can also move to different rooms or take the work home with them.
Many people assume companies are choosing a desktop, portable computer and a smartphone. I'd say this is inaccurate. Portables are replacing desktops.
Microsoft Office for iPad would be welcome by many I'm sure, but not having it isn't going to keep iPads out of enterprise. They're already there and the people who use them love them. The same can't be said for their Windows PC's.
A reasonably priced MS Office application would likely be bought by most iPad owners, but it's not going to be a deal breaker for most people. If it is, it's just the first reason on the list of reasons not to buy one. Once it's available, they'll replace that with another reason.
What Apple really needs to do here is do a better job of promoting awareness of iWork. Most people don't even know what it is, but if they actually tried it (particularly for Pages and Keynote) they'd never go back to Office again.