A family of Microsoft word processing software products for creating web, email, and print documents.
See http://www.gmayor.com/scan_into_word_2007.htm for a reuse of an old function to scan directly from Word.
I'm not sure why the function was ever removed, but my guess would be to avoid the incorrect usage of images and pictures in Word. Scanned images should be processed by a graphics program where you adjust colors, cut away unwanted pieces, ... and should only after all that is done been inserted into Word where you should have no need to tamper with the image content at all. Word is not a graphics program and should not be used as one.