Yes, a well made contact print even on enlarging paper can have a tactile quality that can't be matched by a well made enlargement, in my opinion. Some will disagree. Try doing both for a while and look at many prints made by others, and see what you think for yourself.
Yes, if you use a smaller bulb, you will have a longer exposure time, but if it's not a bulb that is made for the enlarger, it may not provide even illumination. If you are contact printing with an enlarger as a light source, there is no disadvantage to stopping the lens down all the way, and you can add ND filter material to reduce light output further.