I'd be hard pressed to find anyone who hasn't used the Microsoft Office suite, so I can't help but compare iWork to it...and by doing so, I can't help but feel like Office does a lot of things better. That's not to say that iWork is bad, or you can't be productive with it, but I just still feel like I'd prefer to use Office for most of my big document creation projects. Here's everything broken down:
SHORT VERSION OF REVIEW
Get it if you prefer to stay in the Apple environment--it will do pretty much everything you'd ever need out of a document creation app like this. But if you're heavy on document creation and used to Office, I think you'll feel like iWork is quirky at times, and can be annoying/counter-productive.
Each of these bundled apps (pages, keynote and numbers) are really very good. Like I said, you can easily feel productive with them. I do most of my document creation using them and it works pretty well. These apps also benefit from being tightly knit into the Apple ecosystem, so you get an experience that feels in-line with everything else on your Mac. Personally, that's a big plus for me--I love feeling like my OS is all one single experience, without having to think much about why one application does one thing, and another doesn't.
OFFICE/IWORK FILE FORMATS
They play pretty nicely with one another. I'm 90% sure Office won't open native iWork file types, but you can easily save all your iWork documents as the older 97-2003 file formats (no x at the end) and open them up in the respective Office app. The conversions are usually spot-on. Typically I find that fonts don't work (not a big surprise) and sometimes it may complain about a special type of formatting, but other than that, it plays real nicely between the two programs. It also always tells you when a document is opened that things were changed/missing, and lets you review those changes--so you at least get a heads up on anything that may be quirky.
Finally, one other thing that is somewhat annoying about the iWork application is that if you open up a word document, for example, and then edit it, and try to save it--it more or less forces you to save it as a .pages. Sure, you can click "save as Word copy" and save it and that'll work. But if you then try to exit the application, it'll prompt you again to save it, because it wants you to save it as a .pages document. That's annoying--I usually end up having to maintain two copies of everything. One as a word document, and one as a .pages document.
ONLINE DOCUMENT SAVING
So right now there is an online documents beta that is integrated into iWork. I personally love this feature, and it's so much easier to use than any current implementation of Office online. You just click 1 button, and check a few settings, and it uploads it to their site--you can even have it send out an email to people you want to share the document with. They can add comments, make changes, download it in 1 of 3 formats that you specify (.pdf, .pages, .doc for Pages application), etc. It's still beta, so there are a lot of missing features I'd love to see implemented, but it works real great for easy document sharing.
I also own an iPad, and so being able to work with native format documents between the iPad version of iWork and the full blown desktop version is nice. I can easily move documents, edit them, etc, using iTunes. The iPad version also lets you upload to online to Apple's iWork site, which is real nice.
TIMES WHEN I LIKE OFFICE BETTER
This is the one time so far when I had to simply switch into Windows and use Office--for document editing/change tracking, etc, in Word. I really prefer the way Office handles document changes and change tracking. Pages does it by adding a huge stream of comments on the left side that indicate what all was changed, instead of doing in-line markup like Word does. That may be fine for a few changes here and there, but if you heavily edit a document and open it up in Pages, your screen will feel crammed with comments, and it's hard to trace them to the changes being made. It feels messy, and not very productive.
Other times when I prefer Office (but don't feel the real need to switch to it) is when I'm doing outlines in Pages. Word does a fantastic job of working with outlines, and properly predicts/changes the outline according to changes you make. Pages does an okay job--creation it works, but once you begin editing or making changes to the outline, you will typically end up doing a lot of manual work to update tabbing, indents, etc.
If you're looking to stay inside the Apple ecosystem, I would recommend this purchase. The family pack pricing is also pretty great. I have it installed on two macs, which was a breeze. Also, of note, is that if you are still on the fence about this application, they have a downloadable trial that you get for 30 days. I'd highly recommend doing that before committing to any purchasing. (available on Apple's site)