OpenOffice.org sucks! I'm sorry to say that. I love the freedom it represents, but on a daily basis, it is the one piece of software that makes me miss Windows. (I even thought about reinstalling Windows once!!).
I think this move is going to be very beneficial for the product. I don't think the problem came from Oracle (OOo was bad under Sun too), but by creating the Document Foundation, the community of developers are now attracting companies like Google, Novell and Red Hat (Canonical too should be worth mentioning). Now if a consortium of the most creative developers of Open Source unite to work on this project (and get the funds to do so ), it cannot necessarily be bad.
Microsoft is definitely going to react about this.
Their Office suit is far too important. If Google (who's already threatening them greatly with their online collaborative Google Docs) starts backing up another office suite, that cannot be good for them.
Let's hope that this battle will help us get better products. <dreamer> Maybe MS Office's source code? </dreamer>