The file format has indeed changed significantly from SpreadsheetML to Office Open XML.
And, since now spreadsheet files are broken into multiple XML files (which are all then zipped), there's no real hope of an easy XLST solution.
The most straightforward course of action, unfortunately, is to automate Excel using a macro to open each SpreadsheetML files and do a "Save As" to the newer format. This can be done in Office 2003 with the Office 2007 file format plug-in. Perhaps this can be relegated to a batch process so the server is not directly involved?
If the data in the spreadsheets are trivial and follow a consistent format, you can write your own parser to import directly from the SpreadsheetML files.