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Just for starters, forget about a smooth migration away from Microsoft Office. Google added support for Office 2007 file formats in June, but so what Even with the older Office formats, Docs chokes on all but the most rudimentary formatting. I tried importing various real-world files from my archives -- not mock-ups or demos, but actual work -- and anything more complicated than a simple column of text came up distorted.
A demo file created in Word 2007 revealed just how many features Docs gets wrong. Tab stops, paragraph spacing, page margins, and placed images all move around indiscriminately. Curly quotes import properly, but that's actually a minus because there's no way to type them in Docs. Revisions made using Word's Track Changes feature appear all jumbled together as plain text; ditto for Comments. Page headers and footers are converted to inline text at the top of the document -- no surprise, because Docs doesn't even preserve pagination. Macros Auto-update fields Dream on.
The same goes for Excel files. Basic figures and formulas import properly -- which would be great if you were migrating from Lotus 1-2-3 -- but don't expect much else. Images are discarded, along with any formatting beyond simple cell sizing and shading. Charts embedded in Excel 2007 appear as big, white boxes labeled "No Data." Charts embedded in Excel 2003 or earlier simply disappear. It's often possible to tweak the Excel 2007 charts by hand so that they draw from the right columns, but even then, Docs' graphing engine is mostly a toy. There's no support for features like trend lines, no formatting options, and the output is hardly presentation-ready.
With PowerPoint files, Docs does an adequate job of preserving the basic look and feel of presentations, but again, it's a poor substitute for the original. Graphics appear blurry and re-sampled, text moves around without warning, and animations and transitions are eliminated. And here, Google doesn't bother making a pretense of supporting PowerPoint 2007.