A personal note: I just upgraded from Office 97 over Windows 98 to Office 2003 over Windows XP. As a result, my anxiety about crashes has diminished, and a few things work a little better. All in all, however, I'm not even 1 percent more productive.
Multiply me by 30 or 40 million knowledge workers and you begin to see Microsoft's problem selling Office 07 and Vista.
There's no reason to buy them.
Actually, that's not true. But the reasons to buy them aren't about easier formatting, better indexing, etc. They're about integration.
Bill Gates' vision is that these products, in conjunction with the CRM and ERP offerings of the Dynamics group, will finally deal with the last mile in productivity - the communication gaps between desktop and back-end applications. For example, with Excel 2007 over Vista, employees will be able to track numbers from Dynamics CRM and receive alerts -- all without leaving the Office environment.
Microsoft is also integrating VoIP into Vista, and maybe even XP. And the company has even breached the Berlin Wall of IT by making a deal with Novell to provide interoperability between Microsoft Office and Open Office.
No matter what your feelings about Microsoft, you have to admit the integration picture looks pretty good.