I'm not sure that I know the answer to this question. One thing that you can try (if all of your contacts are google contacts that sync) is to try going into settings:applications:manage applications, find "contacts", tap it and tap the "clear storage" button. This will wipe out all contacts and settings in the people app, but they will resync with google after a few minutes.
If that doesn't fix it, unfortunately, the only thing that I can think of that will is a factory reset and start again from scratch. If you need to keep your SMS messages after a factory reset, there are a couple of apps in the market - SMS backup and restore and SMS backup+ - which can backup your messages before you reset and then restore after you reset.