So apparently when Adobe got rid of ImageReady and combined it with Photoshop, not all of the features were transferred over. One of the key features missing in Photoshop CS3 is the ability to open an animated gif file as a series of frames/layers.

Fireworks can open animated gifs properly, but if you don’t have Fireworks you can still use Photoshop CS3!
Posted by Mike Hollos on Oct 8, 2008
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You can open them but there is a run around….
Choose File > Import > Video Frames to Layers
In the file browser in Windows, type *.* in the File Name and press Enter or click Load.
It will not open any file, but it will view every file without restriction of Type of Files.
Open your animated GIF files, it will show you a dialog box regarding the imports. Press OK to import as default.
Voila! The file is opened in animation frames.
You can view the animation time frames from Windows > Animation.
What is worse is you have to also have the latest version of Quicktime installed.
For MAC users just change the .gif extension to .mov and import it into PS.