I don't believe that prior to CS4, mt2s is a supported format.
If you do a search for "transcode .mt2s", or "convert .m2ts", I'm sure you'll find a handful of possible solutions for your dilemma.
Your OS, budget, and preferences will probably determine your course of action.
M2TS usually refers to AVCHD files, which indeed only are supported natively in CS4. You may try renaming it to MPG and see, if AE imports it that way, but that's pretty much it. Otehr than that use the conversion software that comes with your camerato transcode it to MPEG-2, H.264 or AVI files or use tools like ffmpeg, MPEG Streamclip or SUPER© to do so.
Like everyone else already suggested, there are stuff out there that can help convert it to a file easily recognized by CS3. However, I ran into many headaches just waiting for it to finish convert. And after the conversion, the clips just doesn't look as good anymore.
CS4 solves this problem. After I got CS4, working with AVCHD has been easier, but not a lot of problems cleared up for me. But that's in premiere. AE works fine.
Thanks for the answers everyone, I was thinking about upgrading to CS4 soon anyway so i guess ill just wait. I appreciate the help.