Most everyone is up-to-date enough about job search methods these days to understand that you need both a Word document (or a PDF format) and a text format file that follows the correct layout guides for databases. In case you aren't quite familiar with this protocol, let me review quickly.
Sometimes, databases (especially older ones) have trouble uploading Word documents with all the formatting such as underlines and bold. To overcome this problem, text/ASCII resumes were developed to be compatible with resume databases. Text resumes have to follow certain rules involving character width, character set, etc. so they don't give databases indigestion. The problem with text format resumes is they are UGLY! They are designed for a machine to read rather than a human.
Humans like fully formatted, attractive Word format resumes to read. In fact, formatting can make a significant impact in the effectiveness of a resume so it has a function other than just looking nice. Good design and organization in the format can improve readability and first impression.
The problem some job seekers have is knowing when to send which version. First of all, if you are uploading your resume to an online database, read the instructions. If it says the system accepts Word documents, use the Word format resume to upload. If it doesn't say or it says that it accepts text format only, use the text format. That's easy enough. But what about when you are emailing the resume to a recruiter or someone at a company? That's where people goof up.
When you are emailing your resume directly to a person, make sure it is in either a Word or PDF (protected document format) format. People prefer to read Word documents because remember, text files are UGLY and actually difficult for the human eye to read. Never make reading your resume difficult. Make the whole experience as easy for the reader as possible.