Office 12 was one of the products that was demonstrated at Bill Gates PDC keynote.
When users have been asked about the features they would like to have in the new Office version, 9 out of 10 users asked for features that are already available. So the UI needs a change! The ribbon - no more menus (except the File menu). Instead, there are tabs. With every tab different controls show up depending on the context. The user interface is highly customizable with XML and managed code.
More XML: XML is deeply integrated into Office 12. While Office 2003 supports XML (see Creating Word documents with XML part 1 and part 2, and Getting data from Excel 2003), now the default file format is XML. A docx, pptx and xlsx file is a compressed file that contains XML, pictures, and all what belongs to the document. For backward compatibility, Office 2000 + Office 2003 will support this format, too (if the extensions are installed).