Attachment filenames with spaces are not decoded Internet Explorer but they are decoded by Firefox. Firefox happy replaces the +'s with spaces when it tries to save the file but Internet Explorer doesn't.

Is this something that can be fixed in Confluence? Or is it purely a browser issue?

The URL is:
http://confluence/download/attachments/9389/Orion+Systems+VLPS+1+Apr+2006.pdf?version=1

Here are the headers returned to Firefox by Confluence:

HTTP/1.x 200 OK

Server: Apache-Coyote/1.1

Last-Modified: Mon, 22 May 2006 22:23:02 GMT

Etag: "1148336582000"

content-disposition: inline; filename="Orion Systems VLPS 1 Apr 2006.pdf"

Content-Encoding: gzip

Content-Type: application/pdf;charset=UTF-8

Content-Length: 81840

Date: Thu, 24 May 2007 22:33:27 GMT