why do contacts now appear twice on iphone 4 since latest update?

Why do my contacts now appear twice on iphone 4 since latest update? The iCloud account has loaded, but all options are switched to 'off', so I don't think iCloud is the issue. My contacts syc from one selected folder only, which is nominated in iTunes. Now the contact list on my phone displays "All Contacts" as well as my selected folder "iPhone Contacts" and both lists show all the contacts twice. After upgrading recently to iTunes 10.5 with the new iPhone update the contacts appeared twice on my computer. I deleted all the duplicates under "iPhone Contacts" and re-synced....but the phone still shows everything twice. Any suggestions would be much appreciated!