I used my iPad primarily to write a
25k word novella which is just starting to percolate across the internet. It will show up on the Amazon Kindle store in a day or so, which I'm really excited about, then iBooks a few days after that.
All in all I didn't really have a hard time with it, and I wrote 99% of the stuff directly on the iPad. No keyboard dock or bluetooth keyboard. It took some time to get used to it, as well as turning off auto-correct (I was using Pages, which has its own spelling feature that isn't as obtrusive) but after a couple days I was writing as much on the iPad as I had been on my laptop.
The iPad has completely surpassed my laptop, in fact, when it comes to writing outside my home. I used to take my laptop down to a cafe for an hour but nothing beats being able to just throw my iPad in a small bag and go.
For software my setup was a bit convoluted. I sync everything to Dropbox, both because it backs stuff up a second time but also because it allows me to keep my important documents on multiple computers. Sadly file sharing with the iPad sucks, so I had to accomplish this a roundabout way.
I did all my document creating in Pages, then exporting them as a doc file. I also bought Docs2Go because it has a desktop application that lets you sync a folder between the iPad and your computer. So I would set that desktop application to watch a folder in my Dropbox, then use iFile on my jailbroken iPad to move the doc file from Pages into the folder on Docs2Go, which made the program think a new file had been created the next time I sync'd it to my desktop.
Convoluted, but after the first day or so you pick up the rhythm. Obviously if you don't care about this setup you won't have trouble.
Pages has its limitations but it's still the best writing app I've seen on the iPad. I prefer to use Office on a computer (and don't own Pages for OSX) but nothing else compares yet when it comes to featureset and ease of use.