Everything you want to know about Visual Studio ALM and Farming
Brian Harry is a Microsoft Technical Fellow working as the Product Unit Manager for Team Foundation Server. Learn more about Brian.
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When we were planning the requirements for TFS 2010, we decided to take a dependency on Office 2007 and later. This enabled us to make some significant improvements to the TFS integration due to extensibility improvements in Office 2007. However, I've seen a few customers who are stuck on Office 2003 and have been disappointed to see that Excel and Project integration with TFS stops working when they install VS/Team Explorer 2010.
It is possible to get it working again (with the 2008 client). John explains how here: http://blogs.msdn.com/team_foundation/archive/2010/04/24/vs-2010-and-tfs-with-office-2003.aspx