Why is Google dropping support for Office 2003?

Update 10.15.2012: Google has decided to extend support for the binary file format. A majority of the requests for keeping the format came from outside the U.S. It would be interesting to know if pirated versions of Office, unable to easily implement the Compatibility Pack, are driving this requirement.  

The best source for learning more is to evaluate why Microsoft moved away from Office 2003 file formats. At the time, ~5 years ago, this was pretty painful for many businesses. While they might not have been making the move to Office 2007, many personal PCs and other companies making the move quickly began pumping out massive volumes of the .docx, .xlsx, and .pptfile formats. Enter the Office 2007 Compatibility Pack. It wasn't possible to conduct business without being able to work with the XML-based file format so the Compatibility Pack was quickly installed everywhere.

This is a change that happened 5 years ago so if it's an issue, your have bigger problems in your IT org. These file formats are restrictive and outdated. They should be sunset in the name of progress. 

Why did Microsoft move to XML-based file formats?

Without XML, the way a document is created doesn't include any information about its actual content – all that is captured is the way the content is styled. XML is about creating documents in which the content is delimited, or set apart, by tags that explain the meaning of that content. So in a birth certificate, for example, a user could tag content elements such as the name, birth date, time of birth and place of birth. Having regions of meaning in a document conveyed via the XML file format allows documents of all kinds to be shared across the organization and via Web services. 
Numerous industries, including financial services, insurance, governments and healthcare organizations of all sizes are using “custom-defined XML schemas” to create their own regions of meaning that are specific to their business in conjunction with the Office Open XML file format. This allows them to reuse the content across productivity applications, such as Office, and across other kinds of tools like databases, workflows and server processes. The Office Open XML file formats introduce significantly enhanced XML formats for Microsoft Word and Excel, and the first XML format for Microsoft PowerPoint. These new formats improve file and data management, data recovery and interoperability with line-of-business systems beyond what is possible with Office 2003 binary file formats, such as .doc, .xls and .ppt.
Those of us in the XML community have been dreaming for 20 years of the day when a technology that has helped millions of people create billions of documents would be firmly anchored into a stable standard that gives the power of the content in these documents back to the people who created them. I'm very excited about the potential that standardizing on the Office Open XML file formats holds for giving customers unlimited and perpetual access to their data without being tied to a single solution. This is something that the XML community has been trying to achieve for a long time, and I'm thrilled to be a part of it.

These statements from Microsoft employee Jean Paoli are from 2005. If you have an IT team who says dropping support for the older file formats is a surprise, it's time for a new IT department.