Best word processor (tie): Office2HD
If you want the ability to edit files directly from the popular cloud storage services, your only strong choice is Office2HD, which supports Box, Dropbox, Google Drive, and SkyDrive (but not iCloud). The word processor is capable, supporting most features users need: revisions tracking, tables, spell checking, text formatting, graphics insertion, and (a recent addition) both AirPrint and printing and PDF export.
The one surprising limitation is that you can find text but not replace it. As with most iPad word processors, you can't create or apply real style sheets. A cool feature is the ability to go back to previous versions of your documents.
Compatibility: iPad (iPhone version: $5.99)