My 2004 version of Microsoft Word, Powerpoint and Excel aren't compatible with Lion.  What are the alternatives?

Do I upgrade my Microsoft Office Suite or purchase the latest iWork?  Wish I hadn't switched to Lion.

Yes, unfortunately the Lion installer doesn't forewarn you that this will happen and unless you're a total Mac-head who keeps up with the Apple news, you may not have been aware of it.
You have the option of going back to Snow Leopard, or going with one of the options suggested by Niel.
I wouldn't myself recommend iWork, mainly because it now comes with Lion's new Autosave/Versions feature, which is a whole new nightmare on its own. Luckily (for me) I have an old version of iWork that doesn't save anything unless I tell it to.
But I'm personally very happy with Office 2008, which I think is better than Office 2011. So it isn't only Apple that releases new versions of things that are worse than the previous version (which is what I think of Lion).
I went back to Snow because at the moment Lion isn't helping me get my work done - it's strewing obstacles in my path.
If you get Office 2008 it will run on both Snow Leopard and Lion.

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