InDesign does have built-in VDP/Data Merge support, at least I know CS3 does and I've used it (recently) to merge a mailing list for personalized mailing labels for a corporate job.
You'll need to save your Excel file (with column headers) in CSV format in Excel's Save As dialog for InDesign to read it. Open your ID document, then go to Window > Automation > Data Merge. It outlines the three steps you need to do in order to make the merge work:
1. On the palette options menu (upper right) select Choose Data Source and navigate to your CSV file and open it.
2. Drag the field name into your document's text where you want it to be placed and format accordingly. Use the palette's preview to see the merge data for each record and correct formatting as needed.
3. Click the Create Merged Document button in the lower right of the palette, answer some questions about your target document, then click Ok and ID will create a new document with your data merged into the document as you requested. Since it creates a new file, don't save over your original layout so you can reflow the info or adjust the layout if needed without having to do it over and over in your new document.
Check the Help for more information on getting set up and for figuring some of the finer points out. I was able to do this in about 30 minutes from not knowing ID had this capability built in.