I am looking for an Out of the Box/ Easy configuaration change within SharePoint 2010 to maintain version history across different root extensions (.doc vs. docx)
As far as i understand there is no easy configuration to enable versioning across farm or web application. There are other ways to do this.
You can enable versioning at document library level. You can follow the steps from here:
Other is you can write a feature to enable versioning in your specific document Library.
We have the same issue. Versioning is turned on, we have documents in the library with previous versions, and now we want to convert the .doc to .docx without losing version history. SharePoint only recognizes docs as new versions if filename is exact match, including file extension, so we can't add a .docx and have it added to the .doc version history.
It seems our best option so far is to create a separate library for the .docx documents and add a lookup column pointing back to the previous doc.