There are dozens of writing apps. You can divide these into two groups: notepads and Office suites.
Most, if not all, notepads can export and import documents. You can open mail attachments into them, and mail out whatever you write.
Some notepads are more advanced because they allow you to add images, audio, handwriting, etc. Handwriting-only notepads are a subgroup, but one, WritePad, turns handwriting into text.
There are three main Office suites. iWork is okay but misses certain features such as word count in Pages. Most people I have spoken to don't believe iWork is worth the money, but if your needs are quite basic you can get work done with it. QuickOffice is the most limited of the Offices apps but looks nice on the iPad because it was written especially for it. Documents to Go is feature-rich in comparison with the other two but looks worse on the iPad screen. Images can only be inserted in Pages.
When the update to iOS 4 arrives we expect many of these apps to be improved. It seems developers are reluctant to invest time in making improvements before they know how their apps will behave in iOS 4.
Personally I have switched from the net books and laptops to the iPad. My work is writing-oriented so I store a lot of text in many formats in an app called Readdle (GoodReader is just as good) and compose documents in Pages. I also use notepad apps from time to time.