No, you need the Upload class to process and validate your uploaded file. This results of that will be a file on disk (preferably not in DOCROOT, but in a more secure place). Then you need to read the file into a variable, properly escape it, then assign it to $product->sheetdata, then save $product, and if that succeeds, delete the file from disk.
The page I linked to is giving you some pointers.
This is all not very Fuel related, this is general PHP knowledge. If you don't have that, try to find the answer online. That is how I found that link...