Have an iPhone 3GS, upgraded to iOS 5 after lots of reassurance from coworker with a 3GS about two months ago. No problem with using the contacts within the phone app or the contact app until the past two weeks. Tried all of the above recommendations, soft and hard reboot, reset all settings, reset network settings, restored the phone and none worked. Finally unchecked the "Sync Contacts" box on the "Info" tab in iTunes, then synced again. All contacts stayed on my computer and my phone and now I can use the contact list like I had been able to for over two years prior to "upgrading" to iOS 5. Will keep y'all posted.
Jeff, I hope you are well. You have likely replaced your 3GS as I am gathering your initial post was made over a year ago. I have a 3GS and it is in great condition. Recently,I have noticed that my screen has become increasingly unresponsive. I am concerned that the advancements in system updates will exceed the capacity of my hardware.
I get the "freeze" when adding a contact, and sometimes when trying to call using a contact. If I wait long enough (sometimes a minute or more) the screen switches to Facetime! and says Facetime failed. Othertimes,, especially when adding a contact, it just takes a long time (again a minute or more) and finally addes the contact, displays the contact briefly, then switches to the dialpad/phone app. Frustrating but apparently solvable by waiting.