To Vista or not to Vista probably has a lot to do with how you use your machine. If you do a lot of inking then you will probably appreciate Vista.
To move to Office 2007 or not is almost a separate issue and a visit to Microsoft's site for Office is probably a good place to start
I run Vista on all my Tablet PCs including a couple of TC1100s (both with 1.5 gigs of RAM) and I would *not* go back. I use the TC1100s without a keyboard 99% of the time and Vista works very well for me and is an improvement over Windows XP Tablet PC Edition for the way I work.