If you are using MS Word and Excel routinely, and particularly if you use complex Excel spreadsheets, then I would recommend using MS Office for Mac. I tried iWork for a while and it can import to and export from Word and Excel formats, but the functionality is not the same and there is a risk with compatibility. iWork's Numbers is innovative, but it is not a spreadsheet application to replace Excel. I soon found it more productive to go back to MS Office for Mac.
MS Office 2008 for Mac has just been released and although not cheap, the Home and Student Edition (includes Word, Excel and Powerpoint) is much better value than previous versions. I am sure that thanks to the market presence of iWork, it has forced Microsoft to be more competitive.