Normally the paste is called for when you are kneading it into a solid product, like fondant icing (I'm in England so our terminology might be different). The drops are not a substitute in this case, they "skate on the surface" and will not give you a smooth colour. They begin to breakdown the icing, and turn into a sticky mess. And that red stuff does not come off your hands! Really, you are best to use the paste if that's what the recipe asks for. I tried to cut corners last year and use the drops, fortunately I did a test on a small piece of icing first, and then got back to the store to get the paste.
Happy cookie making!