No, there's no such requirement. Are you sure the filedocument isn't generated? Try generating a document, then checking the files folder in your deployment folder and look for a file created at that time. Rename the file to .doc extension (if you're generating word 2003) and try to open it.
Add: Looks like something more sinister is going on here. Do you know what version of the Java Development Kit is installed on the server? Try upgrading to a recent version if it's an old one.
I solved the issue by installing 64-bit jre6 1.6.0 _ 17 instead of the 32-bit version, and switching to using this in the Service Console.