Our small office (3 people, 4 macs) works well since 4 years on iWork. Spreadsheet, Word processing and presentation are all used intensively and when needed shared with clients in pdf format or printed.
We use hosted MS Exchange which works a charm on Snow Leopard.
It is really a matter of what you are used to, and I fully understand people that are too busy to start using new uncomfortable software to get basic office work done - but iWork is not inferior to Ms Office in a sense that matters to most people in most businesses. The integration across Apple applications alone makes for a great workflow.
But 3 people in an office is microscopic when compared to large customers who have large amounts of back end processing that hook into Microsoft Office and the various middleware offerings that Microsoft has. If it were as simply as using iWork then everyone would do it but most peoples work flow is a little more complex than the random letter or report.