Opening documents inside Dropbox iOS app I have installed drop box iOS app. It syncs with the documents that I have on the pc. Is there any way I can open a word/excel file inside the drop box app with a document editing app like Documents, iSpreadsheet etc inside my iPod touch?

For example, when I select Test1.xls in Drop box app, it should open in Documents free app. Is this possible?
I don't think so. You would need the Documents application to build in support for pulling down documents from your dropbox account. Applications on the phone aren't really allowed to share data because of sandboxing.