A family of Microsoft word processing software products for creating web, email, and print documents.
Cut/Copy/Paste are OS services supplied for the apps... That's why you can use only the keyboard shortcut while in such dialog windows. The fact that you may need to restart the Mac to clear the issue also suggests that the problem is external to Word or Office. Make sure, though, that Office 2011 is fully updated [14.2.3 is current].
I'd suggest that you grab the most current COMBO updater for your version of OS X from Apple Downloads & apply it -- even if you're already at that level. Repair disk permissions & restart your Mac afterward in addition to the forced restart after applying the update itself.
This could also be due to some 3rd party utility, especially if it's intended to "enhance" Clipboard operation. If you have any such haxies see if the problem disappears after you remove disable/remove them.