I still don't think anybody here is clearing this up quite right:
Microsoft Office is a business-minded suite of a
word processor (Word), spreadsheet app (Excel) and primitive presentation app (PowerPoint).
Apple iWork is a designed-based suite consisting of a
page-layout app (Pages) and a very design-oriented presentation app (Keynote).
Note that I did not call Pages a word processor, nor did I call Word a page-layout app. Word is a very excellent word processor, with some very powerful features not found in Pages that relate to word processing. Pages, on the other hand, lacks some more advanced word processing features of Word, but is way more powerful in terms of page-layout (for example, creating posters).
My take on it:
iWork:
- Solid Page Layout Features + 2
- Solid Word Processing Features + 2
- Solid Presentation Features + 2
- Weak Spreadsheet Features + 1
- Weak Email Features + 1
- Solid iLife Integration + 2
- Both Intel and PowerPC Native + 2
- Cheap + 2
Office:
- Weak Page Layout Features + 1
- Advanced Word Processing Features + 3
- Weak Presentation Features + 1
- Advanced Spreadsheet Features + 3
- Advanced Email Features + 3
- No iLife Integration +0
- Only PowerPC Native + 1
- Ridiculously Expensive + 0
iWork Score: 14
Office Score: 12
Since Pages is just about as much word processor as anybody ever needs, plus has basic inline spreadsheet abilities that can create very beautiful graphs, and Keynote is generally accepted as 25 million times better than PowerPoint, I usually recommend people get iWork unless they really need the powerful Excel spreadsheet, or something found in Word.
AppleWorks hasn't been updated since like 2001, and even then only to make it OS X compatible, as AppleWorks was immensely popular in schools, so it wasn't really anything new since the Claris Works days. AppleWorks is not something you should consider.