I have an older version, PS3 Extended. I have always opened RAW files with no problem. Recently, a friend with a newer camera and newer version of PS gave me some RAW files to open, and my CS3 says "Could not complete your request because it's the wrong kind of document". I am wondering if the problem could be that I have an old version of PS? Thanks.
That's exactly the problem. It's all in the FAQ: http://forums.adobe.com/thread/311515
You need the DNG Converter to open a batch of newer raw files. If you need to do this regularly, you might need to think about upgrading or using Lightroom.