PC Magazine has a great tip for those struggling with graphics in MS-Word 2007:
It’s easy enough: Click the Insert ribbon, click the Shape button, and select New Drawing Canvas at the very bottom. Now place your pictures and shapes into the canvas. You’ll be able to move them freely within the canvas, group or ungroup them, and so on.
That probably makes no sense to non-Word users, so go and read the entire article.
As an aside, I had generally moved away from MS-Office toward Open Office but the UI redesign in Office was so good that I am firmly back in the MS-Office camp. Microsoft did a good job on this one, and if you haven’t upgraded you may want to try it out.