Is it 1022, 1028, or 1208 or 1039? I've had a look for a fix for this, and I can see the number is constantly different depending on which topic/forum you're on.
I had problems deleting contacts, but not adding them.
I'm going to assume that your google contacts list has more then 1028 users. And that somewhere around the 1028th contact you've added to google contact (no way to verify that that I know of) is when it stops being able to add new contacts automatically via a sync.
BTW, can you add a new contact manually to your phone? Just testing out my theory....