It will only backup the contacts that say "google"
I had a bunch of phone contacts mixed in with the google contacts. How I changed them all to google contacts to be ready for 2.1 is detailed below. There may be an easier way..this is the way I did it
(i had to do it the way below because I could not mount the sdcard on my computer at work)
What I did was download 2 free apps from the market.
1. ExportContacts (by Rishi Srivatsaval)
2. AndExplorer (by lysesoft)
1. First run Export Contacts. change the .csv to .mp3 in the filename then hit "export contacts" button (i couldn't get the Mail app to recognize a csv file as an attachment)
2. Next run AndExplorer then at the top tap SDCard
3. make sure you see the file there exportcontacts.mp3, if you see it exit AndExplorer.
(The Mail App needs to be setup for this next step, i use a 2nd gmail account for the "Mail" app)
4. With the Mail app, send a mail to your gmail account that you want to sync/backup the contacts with/to. hit menu button on phone then "Add attachment".
5. in the add attachemnt window tap Audio. then tap your "exportcontacts.mp3" file.
6. Tap send.
7. Open gmail on your computer. find the email you just sent from your phone.
8. download the "exportcontacts.mp3" attachment to your computer
9 rename that file back to "exportcontacts.csv"
10. open your contacts in gmail.
11. click on Import in the upper right of the contacts window browse to the exportcontacts.csv file then click the import button.
12. once all imported, do a sync on your phone. from the home screen tap menu button then tap settings then tap data syncronization then tap google.
13. hit the menu button on the phone and tap "Sync Now"
14. when it's all done all your old phone contacts will now be google contacts and all your google contacts are still google contacts.
15. delete all the "phone" contacts from the phone once you confirm they all have a matching google contact.
16 the end
I hear if you have "notes" in your contacts this may not work. if you use the contact notes, when you have the .csv file on your computer, try to delete the notes from the csv file before you import to gmail and sync the phone. (I cant guarentee this will work, as I don't use the notes)