Windows Phone Mango will allow opening and editing files which use the XML standard and has the 'x' extension (docx, xlsx, pptx) but will limit the older formats (doc, xls, ppt) to read-only. They claim that this is done to ensure that the formatting of the documents are not lost.
It is important that you save older file formats into the newer ones if you want to access and edit them on your Windows Phone device. It is likely that support for these formats will die out in the near future.
source - WMPowerUser