I was also having a very similar issue on my iPad2(5.1.1). I was able to correct it by going to Settings->Mail, Contacts, Calendars->Contacts-Default Account. It was previously set t hotmail, I changed it to my company account and then later to iCloud. I then removed and readded the contacts and this seems to have resolved the issue.
Give it a try and post up if it resolves your issue.