I've looked at quite a few text word/text processors for the iPad and most of them come up pretty short. Pages, as an example, seems more of a "create pretty documents" app than a heavy-duty text processor.
Textkraft (US$3.99) is likely the app you crave. It's powerful, easy to use and provides a writing environment you can do real work in.
Here are some of the top features I found appealing:
You can work on up to five documents at once, switching between them with a tap.
Cursor keys support, something lacking in the Apple solutions
Full search and replace
Support for external Bluetooth keyboards
Import and export with Dropbox, iCloud, Box and iTunes file sharing
Sharing with Pages and Evernote
There's more, so check the app's website or the App Store description.
Using the app is straightforward, but as I first started to type, I was taken aback by a large mid-screen display of words in boxes that changes as I typed. The app was suggesting other words I could use, checking spelling and providing alternates. There are lots of suggestions. It's powerful, but I found it distracting. Happily, the feature can be hidden.
I think the feature I'm most happy with is the cursor keys. There's no more fiddling with stabbing my finger on the screen and trying to move the cursor to the correct position. Textkraft also provides delete-forward, something missing on the stock iOS keyboard, and a key that I use all the time.
Documents can be password-protected, and export supports text, Markdown, PDF and HTML (email). I tested printing, and it worked wirelessly to my AirPrint-equipped printer.
The app works in landscape or portrait mode. While I'm a landscape junky, I liked using Textkraft in portrait mode due to the way the screen is organized.
While there are 10 fonts to choose from as well as full bold, italics and underlining, this is not an app for inserting pictures or doing page layout. It is, without a doubt, a very powerful text editor for when you want to do real work.
There just doesn't seem to be much missing from this app. I would love for it to import and export Word files directly, but you have to use the Word-to-text converter app the same developer provides for $1.99. I think that functionality should be built into Textkraft.
Aside from that caveat, the app is complete as it is, but there is an in-app purchase for more text styles for $1.99. I didn't feel I needed them.
If you want to get a feel for the app, download the free Easy Writer Lite. It will give you an idea of the GUI and how the workflow is designed.
Textkraft is a very satisfying text processor for the iPad. It's reasonably priced, and I saw no bugs or crashes while using it heavily.
Other apps worth a look are Documents Unlimited for iPad ($4.99), which does allow editing of Microsoft Office documents, and Document Writer ($5.99), which also supports editing and sharing Office Documents.
Textraft requires iOS 5.1 or later, and is iPad only. It's a 24 MB download.