Well, AbiWord and StarOffice CLAIM to be compatible with MS Word, etc., but they are FAR from it, in my opinion (I use both regularly). Only the most basic documents import correctly. If you have anything beyond the basics, it gets ugly. On top of that, you have to figure out how to get your TrueType fonts to work with X, and printing with Linux is mostly an exercise in futility.
So you see, Linux is perfectly acceptable for users with a lot of technical knowledge, but at this point if you think the average user can abandon MS Windows in favor of Linux on their desktop, that's still a ways from actual reality.
Where can you get Linux programs? If you have Gnome and/or KDE installed (I recommend doing at least a core install of both, so you can run programs for either environment), check out
KDE or
Gnome home pages for software listings. Otherwise there are dozens of Linux oriented websites that can point you to stuff. Just use a search engine.