This isn't a complete story yet, but more will probably follow. My main point is that modern 'word processors' focus too much on presentation at the expense of content. Better content could be produced more efficiently, if the author used a simpler content-based tool like a plain text editor.
I would like to emphasize that Microsoft Word is not the only problem; Word Perfect, OpenOffice.org and their ilk are making the same basic mistake, though there are lots of differences too.
WYSIWYG stands for 'what you see is what you get'. It means that the editable content closely resembles the final product you can print onto paper. Thus such an application is more like a graphics editor than a text editor. It can be useful for certain applications; I have used MS Word and OpenOffice.org to create labels and warning signs.
Another issue is that word processors, which are designed for producing printed text on separate pages, are increasingly being used for all-electronic information exchange. There is probably some nostalgia in imagining those pages on a screen, but it is also annoying to get emails where the actual plain-text message is written on a Word attachment.