You can still use any files created with Works/Office as it will open and work with a number of different file types so there's no worry about incompatibility.
Word is rarely if ever bundled with new PCs as it is quite expensive. Works on the other hand is often bundled as I think Microsoft virtually give it away.
The best way for a home user to get Word is the buy the Office 2007 Home and Student Edition. This comes with Word, Excel (spreadsheet), Powerpoint (presentations) and OneNote.
It only costs about �80 and can be legally installed on three computers in your home. More here
Zephyer, as Cakeboy said, Open Office is a good bet. However, I don't know why you find Works so bad - try setting up a simple database in Access!! Works database is simple,the Spreadsheet does what most people want, but the wordprocessor probably lets it down. That's why Microsoft often bundle Word with Works Suite (see below). Word is also available separately for not much money.
Open Office is certainly very good value as it is free. A lot of chronic MS haters say it is a better package than MS Office even when they know very little about MS Office. Their opinion is heavily clouded by their political motives.
Open Office certainly continues to improve but it is still substantially inferior to the Microsoft product.