Microsoft just released Office 2007. I have had time to play with it, and it is really great. They redesigned the entire interface, and now there are no drop down menus. They replaced the drop down menus with a Tab display and a Ribbon bar. This is the most significant upgrade to MS Office in years. See full article for more info.
I have included a screenshot of Microsoft Word 2007, and you can see the tab display with the Ribbon bar. The Ribbon bar visually displays all of the features that were previously buried inside of drop down menus.

FILE TYPE
Microsoft has changed the default file format toward an open text xml-based format, which is a great thing. However, it creates issues when opening the new files from older versions of Office. Fortunately, Microsoft has really thought through this, and they offer a couple of different options. From within Office 2007, you can Save As back a version. Alternatively, you can install the Microsoft Compatibility Pack from microsoft.com (free download) which allows Office 2003, Office XP and Office 2000 to open Office 2007 OpenXML based files. (Side Note: I downloaded and installed theCompatibility Pack and I had trouble opening Office 2007 files in Office 2003.)
EXCEL
Microsoft has expanded the row limitation from 65,000 rows (in older versions of Excel) to over 1,000,000 rows. In addition, they have worked at making Pivot Tables easier to use, and enhanced conditional formatting, external data sources, and many other features.
RIBBON BAR
The idea behind the Ribbon Bar (shown in the screenshot above) is to *unhide* all of the features available in the programs. Now, each feature has a very visual icon shouting for your attention. The tabs are context sensitive, so tabs show up when needed, for example, the Pivot Table tabs.
TO UPGRADE OR NOT TO UPGRAGE
Personally, we recommend getting Office 2007 on your next computer purchase rather than upgrade existing workstations. However, we can help you perform the upgrades if you decide you want to do the upgrades now.
OVERALL
Microsoft did an outstanding job with this version of Office, and it by far represents the most significant upgrade to Office in years.