As of March 3, 2014, this is still an issue.
iPhone 5
iOS version: 7.04 (/7.05)
Occured either sometime, or immediately after backing up phone to the cloud. All contacts but 1 disappeared. It has been like this for at least 24 hours. I'm overdue for the SSL patch, going to see if it persists after version update...
....
No dice.
A subsequent power cycle elicits no change.
Strangely, there is a circular arrow (presuming 'refresh') in the top left corner of my contacts menu. When I click it, it chugs away for a second, then pops up a 'Password Incorrect' error message with the subtext:
Enter the password for the Outlook account "Remove Account"
Wait, what? What Outlook account is it talking about, and what does it have to do with my contacts? I most certainly don't have an account named "Remove Account".
I tried pressing enter with a null password field, the phone thought for a second, and the popup goes away without any complaints. Still no change in contacts.
Seems clear not an isolated incident, and from thread history, has persisted throughout the entirety iOS 7.x.
Will continue searching for a workaround that works for me. Until then, I'll just have to remember my entire contact list. Everything except for Mobile Music.
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