I have both and I'm also a student, so here's my experiences:
If it's a paper or document that I'm the only person working on, using Pages (iWork) is never an issue. I just export it as a word document or PDF, make sure the formatting is intact and it's fine.
If I'm collaborating with others, then importing into iWork will be fine mostly, but something minor might get messed up (table formatting changed, image location moved etc). Minor glitches, but if you're going back and forth with multiple document revisions, it's a pain.
Having said that, Office 2008 has been such a huge nightmare to work with (both in terms of speed and in general usability), I try to avoid it whenever possible. This may sound like MS bashing, but it's really not. Office 08 is just so cluttered and inefficient to work with, it's incredible.
Plus Microsoft has acknowledged that their floating Formatting palette (basically the most important toolbox you'll use all the time) is incompatible with Spaces (it gets stuck on a space, so you'll switch to Word and Spaces will go to an empty space with just the formatting palette) and MS isn't going to fix it until the next major version of Office.
Oh and Office 2008 isn't compatible with Visio 2007 documents either. Just in case you need to embed any of those into your documents.
So what I end up doing is using Pages whenever I can, Office 2008 if I'm making quick changes on collaborative documents and Office 2007 running under Parallels whenever I need to work with Visio documents. Thank you microsoft.
If you just need to hand in your own work, go with iWork.