I just got the final release of Microsoft Office 2007 (whose new Ribbon UI I love), and was frustrated for over an hour as I failed to get it to install. 
Being a good citizen, I determined to fully uninstall the beta version before installing the release (as it turns out, this is required anyway). Oddly, there was no uninstaller that would uninstall the whole package. I was forced to go through each individual component, uninstalling them one at a time. (Note, as Scott Hanselman writes, that the “Microsoft Office 2003 Web Components” are part of the Beta and must also be uninstalled).
I was slowed in this because two pieces of the installation — Office System 2007 and One Note 2007 — simply refused to uninstall. I needed to use the Windows Installer Cleanup Utility to force them out of the installer database.
But it still gave that same error message. Aaargh! I don’t want to rebuild my whole darned system.
It turns out that Office 2007 plugins, which you probably forgot you had, cause the same effect. Specifically, the PDF writer plugin that you have to install separately (because Adobe are jerks) was my problem. Uninstall that plugin, and you’re good to go.