Leo Laporte,
http://www.labwithleo.com , reviewed iWork 08, recently on his television show. He mentioned that it can read and write files for Office 2007 and that Office 2008 for Mac does not support all the new file formats of Office 2007.
His conclusion was that it was a much better bang for the buck that Office, easier to use, better features, supported all the new Office file formats and at $79, Office was never going to touch the price.