It's a good time to switch
This is a good thing for all. There's no lock-out for those citizens who'd rather not use Microsoft products, and no lock-in for the document creators who have a wider choice of tools. (Which could *easily* include MS Office, if Microsoft weren't so scared of supporting a truly open format.)
As far as cost of switching goes, I'm led to believe that Office 2007's interface is significantly different to earlier versions. Which means retraining people how to use it. MS Technet even has an article which states "User education is required."
Granted, you'd have some retraining to move to OpenOffice or some other ODF-supporting alternative, but the interface is a lot closer to what your office suite users are already comfortable with, and at the end of it all you'd have escaped the MS Office trap and saved on licensing fees now and in the future.
Document exchange with less-enlightened organizations might be an initial problem, but different versions of MS Office tend to cause the same issues anyway.
As for the suggestion of standardizing around a Microsoft Office implementation of ODF, no way! Sorry but that's a Really Bad Idea. MS have plenty of form on this, where they try to subvert an open standard and twist it to their own benefit. Better to make sure the format is fully standardized and documented by a party that doesn't stand to gain or lose from it.