syncing your contacts is different than setting up and using an IMAP mailbox.
if you press the phone button icon on your iphone, you will see the contacts icon at the bottom, in the middle, that is where your contacts are stored.
In itunes you can manage which contacts will sync to your iphone. It will depend on which system you are on, if a mac, then your address book will sync with the iphone, if a windows pc you will have to sync through outlook 2003 or 2007. (in case you are using a windows pc here is a link you might find useful:
http://docs.info.apple.com/article.html?artnum=305845)