If the excel file is in 2007 open xml format (.xlsx), then yes, you can do this a few ways.
First, make sure your library used to hold the generated excel documents is a trusted location for excel services to access (this is in central admin).
Second, your code can easily copy the template file from one shared location into another shared location when an item is created. Do this in an event handler that runs on the ItemCreated event on your list.
Once the template file has been copied, you can open it using excel services and update the cells.
Alternatively, you can use the Open Xml Sdk (v1 or v2, though I really like v2:
http://www.microsoft.com/downloads/details.aspx?FamilyId=C6E744E5-36E9-45F5-8D8C-331DF206E0D0), or ExcelPackage :
http://excelpackage.codeplex.com/ to modify the files.
Unless you want to render excel into the browser, these other options may work out better for you.
A few quick google searches will show you how to open and copy files from one doclib to another, set up event recievers, and manipulate excel documents using the methods descibed above.
