Convert 2003 or older format files to 2007 format files

To convert 2003 or older format excel files (.xls) to 2007 format files (.xlsx) use Office button and select Convert option (highlighted in the screenshot below).

After successful conversion, excel will ask if you want to close and reopen the file. Click yes to reopen the file and use new advanced feature (like increased number of rows & columns, improved conditional formatting, sort on more than 3 fields etc)