IMHO The purpose of SharePoint is to share documents. Put documents into
Enhanced folders and limit who can author and approve documents. Normal readers
will only have access to approved published documents. It should not matter if
they have a local copy  of a document. The only 'official' document  will reside
on the SharePoint Portal.

Local copiees of documents can be a problem even with paper documents; e.g., a
team is working on a document and each member gets a paper copy of the original
to mark up. When the final consolidated document is prepared, each member again
gets a paper copy of that version. One of the team members goes on vacation and
while they are gone, the document gets changed again and everyone but the member
on vacation gets a paper copy of the updated document. The other member comes
back from vacation and gets a call about the document before they get their
updated copy, and give out information based on the copy of the document they
have.

Document control and content management are not solved by SharePoint but
SharePoint can help minimize the problems.

Since the documents are controlled copy  and the latest is the one to be
circulated.
These documents should not float around the world in any means i.e thru mail
, floppies , cd's.
So our users wan't to restict save  as option..
Is there any way to restrict it.

Is this something that Rights Managements might help with?

First if ite can be seen in a web browser it can be printed via screeen printing
although that is not efficient.

You couyld get Adobe Acrobat and create PDF files that don't allow saving or
printing. You'll have to check with someone who uses PDF files.

But again, If you don't want copies 'circulating' only the latest 'controlled
copy' then why have it on SharePoint?