Hi Sreeram,
Microsoft warns that if you want to use multiple versions of Office on the same computer, you need to install them in a certain order (basically, "oldest first"):
http://support.microsoft.com/kb/928091I'm using Office 2003 and Office 2007 on the same XP Pro machine, but Office 2003 was installed first, then Office 2007 after that.
Also, the only irritating side effect that I've seen with Word 2003 and Word 2007 on the same machine is that Word will "reconfigure itself" (seems to take 1 or 2 minutes) when you switch from using Word 2003 to using Word 2007, and vice versa. In the article above, Microsoft provides a Registry edit to bypass this reconfiguration (auto-registration), but also warns that you probably don't want to do it:
"You can bypass the auto-registration. This enables Word 2007 to start faster. However, we do not recommend this because Word may not function correctly if it cannot auto-register itself."
Also note that, as stated in that Microsoft article, you can have only one version of Outlook installed.
Note that all of the above caveats apply to my experience on a Windows XP Pro system. I'm not sure if there are any other considerations when installing multiple version of Office on Vista.