After getting into the circle of death, I found a solution that is less than optimal, but it does download contacts.
I am using a Samsug Vibrant with Android 2.1 and I don't get any notifications.
1 Perform normal pairing.
2 After initial attempt to connect and getting "Phone Off" message.
3. Go to the bluetooth screen on the phone "tap MB PhoneSystem"
4 After a few seconds the command display will show "activating"
5 You then get the screen where you can enter a number to dial.
6. After about a minute, the phone book icon becomes active.
7. After about another minute, dialed # etc. become active.
I have about 200 numbers, it may take less time with fewer numbers.
I prefer to have no interaction with the phone just start the car and go like my old Moto phones did, but this is better then nothing.
My guess is that the phone needs an ok to download, but the notification does not come up. By initiating the connection from the phone, the authorization is not needed. (just speculation)
Good luck.