Hello ufonic,
If you bought the same version as the Office that is installed on your computer, you can use the new key in it, but if you have, say, Office 2003 installed and you bought Office 2007, you would need to uninstall the old Office and install the new office. Unfortunatly, I'm not familure with how to add a new product key in Office. I recommend going to the Office newsgroups
http://www.microsoft.com/office/community/en-us/FlyoutOverview.mspx for suggestion on how to do that.
You should not loss any files created in Office and as far as Contacts and Email, I, again, recommend going to the Office Newsgroups to find out how to Backup those items or there should be some How To docs at
http://office.microsoft.comHope that helps,
Darin MS