Yes. Upgrade Photoshop. See: http://www.talkphotography.co.uk/forums/showthread.php?t=356446 just above you. CS5 or later.
Or download the DNG converter from Adobe linked on this page: http://www.adobe.com/products/photoshop/extend.displayTab2.html
If you own CS5, the period wouldn't have run outI own cs5 but the trial has run out, I own CS3, but I cant find a converter for it!
As the thread I linked to above says, D7000 support was introduced in Camera Raw 6.3, so you need CS5 to use it.I think 4.6 is the latest for CS3 and it supports (I think) the D7000