I received a box of DVDs from Microsoft as part of my Microsoft Partner subscription, and one of them was the latest version of Office. I'm a sucker for upgrading for no reason, so I popped in the DVD and let it work its magic on my computer.
Now I don't use every component of Office in my everyday work, but the three programs I do use (Word, Excel and Outlook) got complete face lifts.
The big innovation in this release is the ribbon. The ribbon has been getting a lot of press and deservedly so. It seems to have been designed with significant thought and intention. It's like a group of usability experts got into a room and said, we're going to design an intelligent toolbar. Things the user is most likely to do should be prominent and hard to miss. Things should also be grouped together logically. And when the user does something, it should intuitively change.
This is the new ribbon toolbar for sending an email in Outlook:

Compare this to the old way Outlook used to look:

Its a vast improvement, not only from an asthetic perspective, but also in usability.
I highly recommend upgrading to Office 2007. And NO, Vista is not required for the upgrade.