I use them both, but I stick with Pages when I can. For things like thesis papers and anythign research intensive, Word 2008 has a lot of great features, but honestly, if I need the brawn of Word, then I would use Word 2007 for Windows. In my opinion, Word 2008 for Mac is an afterthought. Outside of word, Excel 2008 for Mac and 2007 for PC are quite different applications, and are not cross-compatible at all. Word 2008 for Mac is a sorry competitor to Word 2007 for PC. The ribbon interface didn’t translate, and they didn’t make the most of it. 2007 has a lot more polish on features that it shares with Word 2008, those same features which elevate it above Pages.
iWork lacks an equation editor. For that reason, I’ve never been able to type up computer science, chemistry, physics, or calculus papers in Pages. You can buy a third party one, but you’re likely going to have to export them as image files. Why do that when I have Word 2008, which comes with Equation Editor? Better yet, I could use Word 2007 for Windows, which has a much more streamlined equation editor and handles inline equations better.
Word has much better organizational features, which don’t do much if you’re typing a 3–10 page report. However, when you type a paper in the 50+ page range, the citation manager, bibliography generator, and the table of contents tools make Word so much more pleasant than Pages.
Correct me if I’m wrong, but I’m pretty sure Pages lacks these features.