This would be the epitome of the iPhone as a Mobile Office.
So far, there isn't one app in the AppStore with full Microsoft Office functionality.
At this point in time, we can only view Microsoft Office documents as well as PDF files, iWork documents, MP4 videos and more with programs such as AirSharing, MobileStudio (formerly "MobileFinder"), Discover, MobileFiles et al.
MobileStudio actually lets you create .txt files which can then be shared wirelessly with your computer.
There are signs that developers are actively pursuing apps with full Microsoft Office capability. For instance, it has been reported that DataViz are developing a program called Documents To Go for the iPhone. Their website promises "Word, Excel and Powerpoint files on your iPhone".
Palm and Blackberry operating systems already feature this product and it is expected that the iPhone version, too, will provide full editing capabilities. There is no official release date as of yet but the DataViz website offers a sign-up that will inform of product availability.
Quickoffice, the makers of MobileFiles, also seem to be working at Office compatible editors. When you fill in the MobileFiles Survey, it is asking you how high you would rate the ability to edit Microsoft Office files on your iPhone and how much you wo
uld be willing to pay for it. I wouldn't be surprised to see them releasing something similar.
Up until today I have only seen one iPhone app that comes close to full functionality of a Microsoft Office program. This app is called Spreadsheet. With it you can create, edit and share Microsoft Excel compatible spreadsheets. It is available from the AppStore for EUR 4.99.
I have played with a few times (see screenshot), and so far I must say that I am impressed. The great thing about it is the inbuilt sharing capability using the WebDAV protocol. This means that at the press of a couple of buttons ("Import/ Export" and "Enable File Sharing"), Spreadsheet connects wirelessly to your computer and acts as a WiFi hard drive. One can easily drag and drop Excel compatible documents (.xml files) onto it or from it. The only time I ran into trouble was when I opened an .xml file from the shared iPhone with Microsoft Excel for Mac and edited it. When I tried saving it on the shared iPhone, Spreadsheet crashed.
I will post a more detailed review for it soon.
All in all, business iPhone users and professionals looking for a Mobile Office with full Microsoft Office capacities live in exciting times- when DataViz or any other developer release their new program(s) we will be able to radically increase our productivity, efficiency and organization even when we're on the go.