Microsoft has finally made Office more affordable so that Word, Excel, and PowerPoint can be obtained for less than $150 (for personal use). These are the industry standards and are recommended if affordable.
If you are using the latest Office 2007, be aware that many companies have not converted to it, so you may want to save files in the previous Office 97-2003 format. If you are using the more popular Office XP or 2003, you can look at Microsoft's web site to find viewers to allow you to read the latest 2007 files.
However OpenOffice is a free alternative that not only proves to be fairly compatible, it also includes an Access like database (which would be very expensive on its own). OpenOffice V2 is compatible with Office for XP while the newly available V3 is compatible to the latest Office 2007.
Install OpenOffice in Microsoft compatibility mode so files can be exchanged with Microsoft users. One notable option missing in the OpenOffice V2 word processor is the Outline feature which is very useful for building larger documents and reports. There are also minor differences in functions available in the spreadsheet.
Microsoft Outlook Express is the most frequently used email but has its short comings and security flaws. Eudora is the major competitor to MS Outlook and is a great alternative. To get the best spam reduction with Baysian Filters you will need the paid version of Eudora. The next best alternative is Mozilla Thunderbird at no cost.
Until recently MS Internet Explorer was very behind its competitors. Mozilla Firefox has strong security and a wide variety of enhancements. Opera is another very worthy IE alternative and has a unique email client built in.
Microsoft’s NotePad application is primitive, this simple free notepad replacement has improved features, including tabbed files, remembering open tabs on next invocation, code highlighting, enhanced Search, and advanced TextFX.