I'm agreeing with everybody in this thread; there isn't any singe solution--it all depends on what you want.
In my (relatively extensive) cross platform experience, if you need to regularly go back and forth with Office (Word, really) documents, get Office. The Mac version isn't really that bad (better than the PC one, I'd wager), although it has some TERMINALLY stupid bugs that still aren't fixed.
Likewise, if you're very used to Office, you'll probably be more comfortable with it. And, if you are one of the 1% of people who actually use the heavy-lifting features of Office (large-scale collaboration features in Word or the heavy duty calculation stuff in Excel, which I think is by far the best Office app), then spend the money and actually get what you're paying for.
It does seem sad that Office is priced like a heavy-duty professional-scale application like Photoshop, and built like one (it's really a corporate collaboration suite set pretending to be a word processor), but 90% of the people only ever use Word out of the suite, and probably 98% of people never use even a tenth of the features they're paying hundreds of dollars for.
Anyway, if your demands aren't as major and you don't move files around with other people much, Appleworks is probably plenty for you. I know plenty of people who are happy with it, and I mostly use it. The draw module of Appleworks has considerably better non-text layout tools than Word, too.
But, if all you ever do is word processing, don't get either--check out the alternative little apps. Textedit is surprisingly capable (especially under Panther), but I recommend
Mellel: it's only $25, feels very solid, has all the basic layout features (including tables), and has an interface that will be generally familiar to people used to Office X, but much cleaner and simpler. I really like it.
