Troubleshoot: Downloading Office 2007 files using IE

Scenario: Trying to download some Microsoft Office 2007 file from internet (or intranet) using IE (e.g. Word document, Powerpoint presentation, Excel workbook, etc).
Problem: The file gets saved as a ZIP file. Hence, unable to open the file properly.
Solution 1: Change the extension of the downloaded ZIP file to the correct expected extension. E.g. DOCX for Word 2007, XLSX for Excel 2007, PPTX for Powerpoint 2007, etc.
Solution 2: Use Mozilla Firefox to download the files as it saves the files with correct extension.
Related Software: Microsoft Internet Explorer 7, Microsoft Office 2007, Mozilla Firefox 2

P.S. Solution 1 works since the Office 2007 files are actually renamed ZIP files (refer: http://en.wikipedia.org/wiki/Office_Open_XML#File_format_and_structure for details)

P.P.S. Thanks to Nishtha Arora for bringing the problem to my notice.