Unlike the transition between Office for Mac 2004 to 2008, or even iWork '06 to '08, the latest update to Apple's productivity suite does feel very incremental. Keynote's improvements are all superficial, Numbers doesn't really add any features most users will notice and Pages is frankly just a bit more Word-y.
That the improvements brought by iWork '09 are minor, though, is really a testament to how good its predecessors were, not a slight on the package itself. The changes are at least enough to make the upgrade feel warranted, rather than an obvious attempt to fleece upgrade-aholic customers out of their cash.
Apple is asking £69 for single iWork '09 license, versus £80 for Microsoft Office for Mac 2008 Home and Student Edition (the one anyone in their right mind would buy). And that poses a problem.
Office is almost negligibly more expensive than iWork and it's the more capable office suite. It's user interface is a little slicker, it inarguably has more power available to be tapped, should it be needed, and there is the inescapable "it's Office, you have to use Office" factor to consider.
However, iWork is undeniably very good and I defy any casual user to notice much difference, in terms of what they can do, between it and Office. Unless Office's greater accessible power is needed, the decision is really one of personal preference, not product superiority.
iWork '09 isn't that much of an upgrade from its predecessor. However, it remains a slightly less powerful and flexible but nonetheless capable alternative to Microsoft's application package and is still cheaper to boot.