You simply need to save your Excel spreadsheet in a tab-delimited text format, then use the text import feature of Now Contact to bring in the records.
Page 132 and 133 of the "Take Control of Now Up-to-Date & Contact" manual covers importing text files.
You may find that the version 4 manual covers importing in a little more depth, the information in this manual is still relevant to version 5 as text import did not change between the two versions. The information on importing starts on page 149 of the version 4 manual, and you can download a copy of it in PDF format here:http://ftp.nowsoftware.com/pub/manuals/NowUpToDate/NUDC41/NUDC45ug.pdf
You may also find useful information in the FAQ on importing trouble here:http://www.nowsoftware.com/customercenter/supportNow/ViewFAQ.aspx?id=1490
This talks about common issues that might show up when importing. Especially note that there is a 64 field per record limit on importing in Now Contact, so make sure you don't have more than 64 columns of data in your excel spreadsheet.