Version:           4.7 (using KDE 4.7.1) 
OS:                Linux

for the standard - XDG_DOCUMENTS_DIR is set to $HOME/Documents. thats ok but the KDE SC choose this as standard working directory. that causes 
1. the file dialog will start always in ~/Documents this should be in $HOME
test this with: open konsole and
cd $HOME
kdialog --getopenfilename ./

you will be in ~/Documents this is wrong and should be fixed. the same behavior is in applications that call the filedialog, like Hedgewars(Qt), Choqok(KDE), aso.

Next the problem that the most scripts and binarys do not work in kde, if they are started with a click because they are written for the working dir in ~ (like it is in all other DE on linux). so they will not work.
a little test (yeah bad but it will show you the problem)
make a script in your $HOME with the content
#! /bin/sh
mkdir ./testdir

save this, make it +x and click on it. 
now it should crate the dir in $HOME but you will find it always in XDG_DOCUMENTS_DIR which should not be.
thats the reason that the most scripts have to start from the terminal (like ATI driverinstaller, all the loki installer, all that humble-indie-stuff, all the icculus things.

a little workaround for this is to set XDG_DOCUMENTS_DIR to $HOME but thats not a fix and thats why i have to report it here

Reproducible: Always

Steps to Reproduce:
in terminal kdialog --getopenfilename ./

Actual Results:  
the filedialog starts always in XDG_DOCUMENTS_DIR

Expected Results:  
it should always start in $HOME and that should be standard in KDE, there is no reason for XDG_DOCUMENTS_DIR

For Kubuntu
https://bugs.launchpad.net/bugs/858592
(Open)suse
https://bugzilla.novell.com/show_bug.cgi?id=438993