For those not using Office 2007 (which is probably most of you until January at the earliest) you should definitely check out the demo and FAQ of the new user interface:

Get Started with the 2007 Release

I'm not MS-cheerleading or exaggerating when I say the new Office UI is the single biggest enhancement to software design since the back button/hyperlink combination.  I find myself opening Office documents just to play with the Ribbon, SmartArt effects, and Live Preview.

Word, PowerPoint, and Excel are in stark contrast to most applications on Windows these days.  They're easy to use, insanely powerful yet intuitive, and they actually feel lightweight.  The ribbon puts everything at your fingertips with a very task-focused approach:

When you compare the consistent user interface in (most of) Office 2007 to our own apps like Windows Live Messenger, Windows Live Mail Desktop, Windows Media Player, and Windows Photo Gallery, it demonstrates just how much consistency can improve the overall experience as you float from app to app.  These applications (which, for the record, I love and use everyday) each have a very different interaction model for toolbars and menus.

Photo gallery does away with menus and has a clean "toolbar" which combines menus and the traditional toolbar.

Messenger HIDES menus, probably because they're sort of ugly.  But it means you have no idea how to get to Options unless you know to click that little down arrow in the upper right hand corner near minimize.  I readily admit that it may not come like this by default, but the first thing I do is hide those menus because they take up space I'm not willing to sacrifice.

Mail is different from Messenger strangely enough.  Menus are hidden this time in that menu icon under your display picture.  The toolbar itself is similar to Photo Gallery but looks different, probably due to the fonts and spacing, etc.

Media Player is the "worst" of the bunch.  It's "ribbon-esque" at first glance but the tabs are actually drop-down menus too.  To find the other menus (yes, there are two different kinds) you actually have to right-click (!) in the toolbar.  Then File, View, etc. appear.  This confused me so much I decided just to show the classic menu again. 

Someday, maybe all applications will use the ribbon as it seems everyone has a unique approach to exposing actions these days.  We've outgrown toolbars and menus and replaced them with a bunch of custom, one-off ways to make programs more functional and more aesthetically pleasing. 

The good news is that the Office UI is actually available to license, so if you're an application developer check it out.  There's even a video about it.  In the meantime, I'll work on our internal teams ;)