I have Word 2008 for the MAC. It should be similar to Word 2007 for the PC. Usually, Microsoft updates Word for the PC then the next year, updates the MAC version.
So, looking at my version, I can go into Word Preferences and set how I want my documents saved. I can choose to save all documents as WORD 2008 or WORD 97-2004 or about a dozen other options as well. So I set it once and all my documents are automatically saved the same way.
"If you want to make an apple pie from scratch, you must first create the universe." -Carl Sagan