What does the average business or home user need from office these days? My use is mainly of Outlook, Powerpoint, Excel and Word, in that order. However I could replace Outlook with Google Mail tomorrow - without any worry. I could probably use a different tool than Powerpoint easily enough - and I think that there are tools that are better for giving web presentations anyway. Excel and Word are the tricky ones. Excel has a massive library of functions that are vital for doing spreadsheet calculations. It is a fairly steep learning curve to work out which ones in Google Apps are equivalents. And as far as Word goes, I think it is a pretty difficult thing to replace, with its huge range of features and publishing options.
However I could just buy Word from Microsoft and run the rest of Google Apps, and just use Word when preparing an important document, or else maybe there are better programs for doing that too.
How inpenetrable is the MS Office suite then? I guess for users with less publishing needs, there is no reason not to do it - and with more organisations cutting their spending, it is only a matter of time to see more cases like this (Google Blog: A Google Apps Education success story) where a Indiana university migrated its 15,000 students and 150,000 alumni to Google Apps. Even though they probably get a sizeable education discount, (quoting $1.5 million in savings) but that satisfaction has increased by 36%...