At BUILD 2014 Microsoft showed off a universal app version of Microsoft Office for Windows tablets which could also run on Windows Phone.
It seems however none of these advances have become part of the Office suite for Windows Phone 8.1, as Joe Belfiore confirmed on Twitter that while there will be some bug fixes, there will be no significant feature updates for the apps on Windows Phone.
While the Office app for Windows Phone excels at viewing documents and retaining formatting when changes are made, it is pretty poor for actual document creation, as anyone who have ever tried to insert an image into a Word document would have discovered.
With screen sizes becoming larger and larger, I think it is fair to expect productivity features to also improve. Hopefully when Microsoft finally gets a touch-first Office suite for Windows, they will also make it available for Windows Phone.