There are quite a few blog comments here suggesting that contact sync just isn't working at present. As far as we are aware contact sync is working normally. We can sync contacts on test devices, add contacts on each end and everything seems ok. There are situations in which the iPhone will delete all its contacts and then re-fetch the contact list from our service. If for some reason it can't contact the service at that point then the device has an empty contact list. It's possible that this event has been happening more often than normal, or that there's some reason why the re-fetch isn't working. We'd expect devices to catch up again and retain their contact list.
Update: if you have no contact sync (or indeed no calendar sync) please send a message to firstname.lastname@example.org with subject 'I have no contacts (or calendar)' and include your Nuevasync username and the number of contacts in your list if you know that. There may be some account-specific problem and we'd like to investigate some affected accounts. Thanks.