hokeyplyr48,
If you modify or create contact on the iPhone or in Outlook the changes should show up after syncing.
This article provides detailed information on the data that can be merged while syncing:
http://support.apple.com/kb/HT1296
A few other things;
There is an advanced option to replace data on the iPhone with data from the PC, click the iPhone under devices> Info Tab> Advanced.
There is also an option in iTunes> Edit> Preferences> Syncing> Warn when __% of the data on this computer will be changed.
Jason