There are pros and cons to simple pastes, pasting a worksheet image, embedding the worksheet, or linking to it in your Word doc.
Whenever you move data from Microsoft Excel to its Office mate Word, it seems there's always a compromise involved: If the formatting makes the transition intact, then changing the data either causes problems or simply can't be done. If you can alter the data, either the formatting is a mess, or the resulting Word document is huge. Here are the advantages and disadvantages of the various ways to add Excel data to a Word document, starting with the simplest.
Copy the cells and paste them as a Word table: If your Excel worksheet is formatted simply, and you won't need any of its formulas or functions to be active in the Word file, simply select the cells, press Ctrl-C, open the Word document, and press Ctrl-V to paste it as a Word table. While this is the simplest and most common way to move data between the two apps, it frequently requires that you reformat some cells, rows, or columns to reproduce the worksheet's appearance in Excel. Also, if you want to perform Excel functions in the Word version, you'll have to make the changes in the Excel version and then reinsert the data as a new Word table.
Paste the worksheet as an image: Just as with the method above, you start by selecting the cells you want to add to Word, pressing Ctrl-C to copy them, and opening the target Word file. But instead of pressing Ctrl-V to paste the cells, click the place in the Word document that you want the worksheet to appear, and in Word 2003 click Edit > Paste Special, or in Word 2007 click the Paste button under the Home tab, and choose Paste Special. In both versions, select Picture (Windows Metafile), and click OK. The worksheet appears just as it looked in Excel, but you can't make any changes to the data, though you can move, resize, and otherwise alter the resulting image just as you would any other image in Word.
Embed the worksheet in the Word file: At first, this approach would appear to make the most sense, since the result is a fully functioning worksheet in the Word document. Unfortunately, the Word file will be huge and preserving the original formatting can be a problem.
To embed the worksheet, copy it in Excel as described above, click in the Word file where you want the worksheet to appear, and choose Insert > Object > Microsoft Office Excel Worksheet in Word 2003, or click the Insert tab in Word 2007's ribbon, and choose Object > Object > Microsoft Office Excel Worksheet. A blank worksheet will be added to the document, and the Excel toolbar will be visible at the top of the Word window. Press Ctrl-V, click a cell, and press Enter to paste the data into the worksheet. (You'll likely have to resize the columns.)
Click outside the worksheet to view it as a Word table (though without the ability to edit cells). Now you can click inside it once to resize it just as you would any Word object, or double-click anywhere inside the worksheet to reopen it as a worksheet, complete with all formulas and functions operational.
You can also create an Excel worksheet in Word 2003 by choosing the Insert Microsoft Excel Worksheet button on the standard toolbar in Word 2003, and selecting any number of rows and columns in the small window that pops up (you're limited to four and five, respectively, but more will be added as needed when you paste).
Embed a link to the worksheet: In many ways this is the most elegant option because you edit the worksheet in Excel and have the changes appear in the Word file automatically, and the file-size increase is minimal. The only requirement is that to ensure the data is available, the Excel file must be sent along with the Word document, and the destination PC has to have Excel installed; you can't access the data directly from the Word file.
Copy the worksheet data as described above, and then click inside the target Word document where you want the worksheet to appear. Choose Edit > Paste Special in Word 2003, or click Paste > Paste Special under the Home tab in Word 2007. In both versions, click the Paste link button, choose Microsoft Office Excel Worksheet Object, and click OK. Whenever you change the worksheet in Excel, you can have the modifications added to the Word version by selecting the worksheet in the Word document (after you've saved the Excel version), and pressing F9. You can also alter the worksheet from within Word by double-clicking it, which opens it in Excel. The worksheet will also be updated automatically in Word whenever you open or print the file, and any other time the program updates fields.
You may not be able to tell just by looking that the table is a link rather than embedded. To verify the link in Word 2003, click Edit > Links; in Word 2007, click the Office button, and choose Prepare > Edit Links to Files.
Tomorrow: more speedup tips for Windows XP and Vista.