We have reported this issues to Microsoft and finally we identified this is a IE 8 issue NOT SharePoint issue. The issues is the IE 8 with “Display intranet sites in Compatibility View” setting does not send correct header information to SharePoint. It send itself as IE 7 and as a result, the Web Analytics "Top Browser" report will record as IE7.
Here is the way to fix it. From IE 8, go to Tools->Compatibility View Settings and deselect “Display intranet sites in Compatibility View”. See the screen shot below.