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Microsoft's new Office 2007 suite of programs (which includes Word, Excel, Powerpoint and Publisher) uses a new file format which is not compatible with the Office 2003 suite.
If one of your contacts is using Office 2007 in its default configuration, when they create documents in Word or Excel, the files will be ".docx" or ".xlsx" files... not the traditional ".doc" or ".xls" files. You won't be able to open those files with your Office 2003 programs unless you download the "compatability pack" from the Microsoft website.
You can download the update from this page on the Microsoft website. Click on the Download button in the blue bar that shows just before the Quick Details subtitle to download the file (it's about 30MB, so will take just a couple of minutes to download using a broadband connection).

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