Some people think they need Office 2008 to open the latest Office file types. I've found Pages handles .docx just fine. I bet Numbers will read .xlsx without problems as well (I haven't needed to test this yet).

After purchasing Office 2008 and being rather dissatisfied, I decided to try using iWork '08 100% of the time to see how it goes. So far I haven't had any issues that've required me to fire up Word or Excel. Keynote hasn't always perfectly rendered Powerpoint for Windows documents; but when I've subsequently loaded those into Mac Powerpoint it hasn't done any better; so there was no advantage to using it.

I've been using Office for a LONG time, starting with the old DOS versions. I had the first version of Word for Windows, purchased Office 95 (which was great for its time, actually) when it came around, and after switching to Mac have bought Office v.X, 2004, and 2008 - fortunately for educational prices. But I don't think I'll buy it in the future - its time is past. Mature free alternatives abound (e.g. AbiWord, NeoOffice/StarOffice); and iWork is faster and BETTER for my purposes, yet costs significantly less.

Microsoft Office was a great tool in its heyday, but it's time to close the book.