There are two good reasons why it won't happen. And thirty million or so good reasons it will. (All the existing iPad owners...) The reasons it won't happen are these:
1) Microsoft Office suite components use a lot of file types that aren't supported on iOS. WMV, AVI, and WAV files for instance. Microsoft would have to include some sort of translator for these file types. Difficult, if not impossible.
2) The MS Office Suite is one of keys to MSFTs continued profitability. The fact that Office is the de facto standard for businesses around the world, and the fact that it works so well with whatever version of Windows OS they are selling, keeps those billions pouring into Redmond's coffers.
What would Microsoft make from an iOS version? Ten or twenty million downloads, at $20 a pop - $400 million. A lot of money by most normal standards. But if it threatens to unseat a business worth billions a year? Shortsighted.
The fact of the matter is that no one can be completely sure of how computer market in general, and the tablet market in particular, is going to work out. Microsoft is betting that a) the PC is going to continue to be the dominant platform in the personal computing world, that b) Tablets running some version of Windows 8 are going to appear fairly soon and c) those Tablets will scoop up a significant chunk of the "business tablet" market.
If Microsoft has guessed wrong on any one of those questions - they may live to regret their decision to forgo making some form of Office for iPads.