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When I download CS5E what happens to my CS3, and is there any impact on my current files created with CS3?
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If you download the CS5 then nothing will happen
If you install the CS5 then the also nothing will happen to your CS3 but the default application for all teh file would become CS5 hence after installing when you will double click on any file craeted in the CS3 it will open in the CS5.
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Adding to what I posted earlier.....
The file will open in cs5 but for some application like Indesign you will not be able to open them back in CS3 once saved in CS5 , hence please beware for the files.