First, the answer is YES.
Second, Do you want to create physical mail letters or e-mail?
Third, I don't know anything about iWork, but in Office 04, you will find it inordinately helpful to click on the assistant and type "mail merge" as your help search. They can describe it better than I can.
Actually this is true regardless of the answer to #2. The system in Office 04 looks by-and-large similar to the one in Office on PCs to me....
(P.S. shortly after you do that, if you're talking about e-mail, you will find that to do it in Office requires you to use Entourage. Prolly because it supports HTML mail and Mail.app doesn't. Or possibly because MS hates you.
)