Steep learning curve
Each app is now available to use for free, where previously an Office 365 subscription was needed to access editing features. However, some of the more advanced functions are locked in the free version, and you'll need a premium subscription to unlock them.
Microsoft Word is an excellent suite on desktop. It's a powerful tool that still hasn't been defeated. The difference with Microsoft Word for iOS is that it replaces all functionality that was formerly used with a mouse with touch controls.
If you have previous experience with Microsoft Word, then using the app on your iPhone or iPad won't be a problem. All the major features are present like creating documents through different templates, writing text with a ton of different fonts, and editing documents stored on your iOS device, OneDrive, or Dropbox.
Touch-based control isn't precise
While it's easy to create documents and edit text, performing more advanced functions is more difficult. Typing text through the on-screen keyboard is okay, but there is a limit in typing speed unless you are very familiar typing with Apple's keyboard.
Manipulating images is more difficult because you have to prepare the document before adding them. If you want the image centered, you have to change alignment before adding it. Photos are imported from the Camera Roll. Once the image is placed, you can't change the alignment which is very annoying.
As a creation tool, it makes more sense for rough drafts rather than full documents. The editing options are present, but if you're dealing with images then it's better to wait until you have a mouse. Though the shared real-time editing available could be a great tool for collaboration.
Integration through OneDrive is great because it will save and sync all changes when you exit the document. Similar integration is also available with Dropbox.
Useful compliment to Word for desktop
Word for iOS is useful for quick edits for text. Photo manipulation is trickier, but can be learned if you spend a lot of time with the app. If you're a regular Microsoft Word user it's well worth downloading the app.
In version 1.6.1, you can now open, edit, and save to iCloud and other cloud storage services with iOS 8.