I know the hassle: Someone sends you an Office 2007 Word or Excel document. You can't open it because you're old-fashioned (or a cheapskate, like me) and decided to stick with Office 2003.
The fix is a quick download away. Microsoft has a tool that updates your old version of Office 2000, Office XP, or Office 2003 to let you open, edit, and save Office 2007 file formats (such as .docx).
Download the Compatibility Pack here.
If you have friends who are older than I am and still have ancient Wordstar, Lotus AmiPro (gosh, remember thatprogram?), or even dBASE II files, there's an official Microsoft Office Converter Pack for you, too. [Hat tip to Jeff Hamer.]
Alternate method for converting files
The Compatibility Pack works beautifully with Office 2002 also. I have been using it for several months and have had no problems.
I had to laugh at your picture of the alternate method. I still have one of those old jewels!