Hi
You can always refuse but then be prepared to be sacked pretty quickly.
If you accept then e-mail would probably be ok, albeit not very professional.
The main question is why they would want to prolong the period. It can be either because of your performance (sorry but attending work is not enough, one expects more of employees

-), or because the company is not in good shape / looking to announce redundancies.
It would favour the second hypothesis given the state of the economy.
My friendly advice: 1. Sign the prolongation 2. immediately look for another job.
Good luck!