There isn't one best solution, it really depends on several things.
1. How is the Excel data created/updated?
2. Is the data going in to Word tabular or individual fields?
3. Are data fields appearing in Word in multiple locations? (Same info in multiple places)
4. What value is added by doing data entry in Excel rather than starting in Word?
5. Are individual documents produced or are you outputting a series of documents at the same time?

Solution options involving initial data entry in Excel could be:
- Mail merge
- Export to custom XML file which then gets embedded in Word which contains mapped content controls
- Macro to populate fields/bookmarks or Content Controls

I note that you asked if you should put the info directly in to Word so you are already thinking about Q4 above. If Excel adds no value then perhaps a Word only solution would be simplest and easiest to implement. I would be most likely to recommend a Word only solution unless you are producing multiple concurrent docs

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Andrew Lockton
Chrysalis Design, Melbourne Australia