Best word processor (tie): Pages
Apple's $9.99 iWork Pages is good at layout-oriented documents, and it offers revisions tracking, tables, spell checking, search and replace, text formatting, graphics insertion, and both AirPrint printing and PDF export. The newest version adds ePub export and comment support, as well as multiuser editing via the Web (but with no revisions tracking or file security).
It does have some limits: You can't work directly with documents in cloud storage services, just those in Apple's iCloud. You must copy a file before editing; there's no Save As feature once you begin editing. You can't create or apply character styles, and you can't create paragraph styles.
(free on new devices)
Compatibility: iPad and iPhone