We use 4%Paraformaldehyde solution for fixation.  Paraformaldehyde is indeed
a polymer which will dissolve with heat and stirring and yeilds a
formaldehyde solution.  A 4% solution then is equivalent to a 10% NBF
solution.
The advantage of paraformaldehyde is that it does not have the impurities or
stabilizers that are present in  37-40% formaldehyde or NBF.  Some prefer 4%
paraformaldehyde to alcohol for better mophological preservation.

 
An answer to these questions would have to be quite long,
and it's all been said before. If you don't have a textbook
that explains what fixatives do, then browse the Histonet
archives - www.histosearch.com - where there are plenty of
detailed answers to similar questions, some with advice
about further reading etc.

Very briefly: (1) There is no such thing as a 4% solution of
paraformaldehyde; it's a high polymer and is insoluble. 
  (2) Formaldehyde does not chemically fix nucleic acid 
macromolecules. It immobilizes them by cross-linking nearby 
protein molecules, including the nucleohistones. 
  (3) In 2 hours a formaldehyde solution kills most bacteria
and irreversibly inhibits most (but not all) enzymes, but
it does not bring about enough cross-linking of proteins to
stabilize intracellular structural details. For adequate
microanatomical or cytological fixation, a specimen needs to
be exposed to formaldehyde for a much longer time. Authorities
differ, but nobody claims that anything happens in times
shorter than 12 hours. 
  (4) Thin layers of cells are well fixed by alcohol, which
coagulates the proteins, thereby immobilizing the nucleic acids.

There are reasons for all this, worked out over the decades
in refereed publications and reviewed in other printed books
and review articles. To solve a particular problem you need
to know what all the steps in the technique do.  

That wasn't an answer at all; more of a sermon except for
the points about fixation.  If you've read this far and
learned nothing, click on Delete.

J. A. Kiernan
Department of Anatomy and Cell Biology
The University of Western Ontario
London,   Canada   N6A 5C1
   kiernan@uwo.ca
   http://publish.uwo.ca/~jkiernan/