Microsoft: can we PLEASE, as your (hopefully valued) customers, have an explanation for this significant annoyance, which seems to have been completely ignored for months?
This is not a Microsoft issue, it's a Google issue. Google drive on iOS does not support direct open/save in ANY iOS app, not just office.
See below for screenshot of apple's own numbers app which shows the error "Doesn't support opening files" for Google drive:

More details on the issue here:
http://www.infoworld.com/article/2845623/cloud-storage/cloud-storage-in-ios-81-doesnt-work-as-you-expect.html
Unfortunately Google have stopped supporting many of the latest features of iOS - no push email for gmail accounts in mail, no picture in picture on the youtube app for iOS 9 and no support for opening google drive files in other apps.
This is poor form from Google - they shouldn't let be letting the iOS/Android platform wars get in the way of usability.