The problem with iWork is interoperability with MS Office. I recently got my parents set up with a new iMac and had them buy iWork instead of MS Office. They quickly switched back to MS Office after getting frustrated at having to export their Pages docs as Word docs every time instead of saving, and dealing with formatting loss when importing from Doc into Pages.

iWork is a much better and more user-friendly set of software than MS Office (unless you're an Excel power-user, in which case the OS X version of Excel probably isn't cutting it for you either), but it's tough to recommend it for non-technical people who need to work with Windows folk.