I get the question "Is there anything out there that works with Word Documents and works like Word that is better or free?" all the time.
Here are my two favorites:
1) I keep all of my important documents that I am working on currently and couldn't bear to lose on Google's own wordprocessor www.writely.com . It has all of the features of Word, it can save to word documents, and it has the biggest benefit of never being in jeopardy of being lost when and not only if your computer or personal confuser like I like to call it decides to die. It is all to common these days for confusers to do that, and instead of naively hoping that your confuser wont or stupidly thinking that you can protect your computer, unless you are using mac or linux as your operating system, then you should have a backup and even if you are using mac and linux you need to protect against loss. Writely is that insurance policy for me. It also has very very very powerful colaboration tools built in.
2) I use www.openoffice.org to edit local documents in whatever wordprocessor format (not to mention spreadsheet, presentation, and database as well). I also save my writely docs to local and open them with openoffice.org's worprocessor so that I can easily convert them to pdf for FREE!
Go to work!