Open Office is what I use because it runs on Linux and Word does not. It does run on Windows as well and it is free. As far as I can tell it does everything Word does only more portable and cheaper, including exporting to doc files required by Smashwords. I have not found any issues with the doc files from OO.
I used to use an old copy of Word before I went to Linux, and I've seen the latest Word (2007) and I figured if I need to learn a new interface it might as well be OO which runs everywhere.
What I would really prefer is an XML format such as
MaduraDocs (write using an XML editor and track changes using SVN). Okay, I do know I won't get much agreement on that one. Currently I can't send that format to Smashwords unless I write something to convert to doc. Well, there's an idea...
But seriously I'd rather Mark and his colleagues spent their time on other things than adding new formats. Doc is useable enough and we have alternatives to Word.