I've heard pages is meant to be good it's also compatible with microsoft word.
It is quite expensive thought for an app but they do word, excel and PowerPoint I believe.
There are many members that have asked the exact question as you have. I have not yet invested in any of these productivity apps, but have been reading up on it for when I am ready.
I utilized the search function to help you read through some of the other postings, have a look:
The IPad Forum is a community of members from all walks of life and from all over the world coming together to share our experiences and to help each other learn about this wonderful piece of technology the Ipad. There is a wealth of information already here in the many threads we have so doing some searches will answer most of the questions you have. If then you cannot find the answer you are seeking then by all means post your question. There are many friendly and informed members here only too willing to help you.