The free version of Documents is limited to certain formatting features and file formats, but the paid version has many more options.
Screen capture by Wally Bahny for TechRepublic
Saw your recommendation and bought Document 2. NOT WORTH it! Emailed test doc was sent as .txt - no formatting. Had to copy and paste formatted text into email to retain formatting - sort of. 12 pt Helvetica ended up as 9 point in the test email received. Recording function was flaky and crashed the app. I then went to write a review of the app, and guess what - I couldn't post it. But I Tweeted my displeasure! Now I want to find a way to get my money back!