I also took Karate for about 10 years. I've been taking Aikido for about a year now.
I'm far to new to Aikido to attempt to provide any real insight about it. However...by "hard contact", I assume that you mean impact...Karate is primarily linear attacks (punches, kicks, etc) or linear blocks where you absorb or diflect the impact w/ your arm, etc. Aikido is different but it's every bit as physical (in fact, I spend MUCH more time "in contact" than I ever did in Karate). A lot of people (myself included) go into Aikido w/ the idea that it's "martial arts for pacifists", and while it CAN be nicer/less damaging to you oponent, it is still a martial art.
As for effectiveness... if your good, your good, if you **** , well, you get yer %^& kicked. It's true in Karate, Aikido or any other martial art. I had some doubts about the effectiveness when I first started (it didn't take landing on my face very many times to change that opinion. After a year, I understand a few of the techniques (conceptually, not necesarily in practice) well enough to see that they would be more usefull to me in any scenario that I'm likely to find myself in...I think.
Also, for me at least, Aikido is a much slower learning curve.