You can change the quicklaunch  to use flyout subheadings instead of
static ones. Not exactly the same as expand/collapse, but perhaps
this will meet requirements.

You do it by editing the master page in SharePoint Designer (or, if
you don't want to customize  the site, by editing the master page in
the 12 hive). Of course, don't edit the OOTB master pages if you can
avoid it; copy them and make your own.

In default.master, for example, look for this section:

<Sharepoint:SPNavigationManager
id="QuickLaunchNavigationManager"

Look below this for these parameters:

StaticDisplayLevels="2"

MaximumDynamicDisplayLevels="0"

Change StaticDisplayLevels to 1, and change
MaximumDynamicDisplayLevels to 1 or 2, depending on how deep you want
it to go.

And don't edit the default.master in the 12 hive using SharePoint
Designer or any other SharePoint .aspx page. You will inevitably break
the page. You need to use Visual Studio for this kind of editing.

There is an article in MSDN related  to this at
msdn2.microsoft.com/en-us/library/ms466994.aspx

All options suggested in this article work fine except "Replacing the Menu
Control with the TreeView Control". Does any one have any idea why this doesn't
work and is there any solution to this?

Did you enable the Treeview control  as explained at the top of the
article? The section you refer to is only about how to modify it, . You
still have to display it.