I never thought I'd nerd out about writing software, but nerd out about writing software I shall.
For years I wrote in Word, then made the thankful transition over to GoogleDocs and am now a faithful convert to Scrivener. As far as I'm concerned, it's the best thing to happen to writers since coffee (or beer, depending on how you write).
At its core, Scrivener is a word processor. You write a bunch of words and then put them into a file other people can read. Though there are tons of handy writing shortcuts in the program, the power comes in organization and output. With a handy side pane on either side of your editor you're able to break up your book into easy arrangeable chapters (separate documents all linked together), fill out comprehensive forms for front matter, characters, settings, plot goals, photographs, notes, ideas, any and all manner of research that you'd like. On top of keeping everything you need to write within a single window (as opposed to have word + google + photo browser + etc open) there is a massively powerful compile menu with presets for manuscript format, paperback novel, PDF, ebooks (Kindle, Nook, iPad)... any file you want you can easily select and output. Normally, you'd need to create several separately formatted files in Word which would take forever, but with Scrivener, the dynamic attribute selection lets you do it on the fly. So many hours lost to Word's terrible formatting options...
Okay, okay, this is getting technical and boring. If you're a writer, screenplays or novels or poetry, do yourself a favor and check out Scrivener. Nerding out over.