Unlike some other online word processors, Zoho strived to create a serious replacement for desktop software from the very beginning. After a while, Zoho Writer started to look more complex than most desktop word processors, and the folks at Zoho decided to address that with a new visual look.
While doing that, they obviously took a cue from Microsoft's Office 2007, switching the "large amount of buttons" look for the tab bar, with each tab changing the entire menu to another purpose. Zoho, however, does something very smart here: they leave the option to have the tabs open like traditional drop down menus. Personally, I've never gotten used to Microsoft's new Office design and I think that Zoho's approach offers more flexibility and truly brings the best of both worlds.
Zoho Writer's sidebar was also improved, with the ability to do searches, perform actions, or multi-select documents directly from the sidebar. Other enhancements include collaborative editing, inclusion of word/character counter in the status bar (very important for translators and writers), and improved page layout.
For a slideshow presentation of the new Zoho Writer, see below.