I have used open office on a computer that did not have MS Word for awhile. It was ok but eventually I ended up removing it and installing MS Word. I did not know until today that Google Docs had a spreadsheet application and word processing application. That was cool except that you have to login to get to it. I did not need Google Buzz when trying to look at Google Docs but I guess that is the price we pay for free apps.
Advantages of using a free online application like Google Docs are that it is free (duh!) and it is everywhere you go like cloud computing. I don't need my laptop to get at it because it is ONLINE which is a huge advantage, I am betting it is very easy to use gmail with it as well. Disadvantages are that you get stuff like google buzz, Google had issues with security recently so I am not sure I want to put sensitive data in a google doc spreadsheet, and it does not have all the bells and whistles as a not free application like Excel. The advantage of using MS Excel or Word is that they constantly upgrade it to have new features (hence word 2007 will soon be word 2010) and you get every possible functionality you can dream of in the applications. They are so widely used there are hardly any compatibility issues. The main disadvantage is have to pay dearly for them, unless you are in education. The other disadvantage is that they are tied to a specific computer. You can not collaborate with another person either. It is harder to merge the same document. With online apps I can work on something and share it with other users to update also.
I am a HUGE advocate of open source software and used to work as a php programmer, which is open source.