I have seen this happen when the contacts folder gets
corrupted. I copied all of the contacts into another
contacts folder then used the Ffolder utility to delete
the folder. Then I used the Command-Line switch
to rebuild the system folder and moved all of the
contacts back into it.

Look on Sue Mosher's Slipstick site for Ffolder Utility:

Ffolder Utility: Utility to rename or delete "special"
Outlook folders such as the Calendar, Tasks, Inbox, and
Contacts. VB source code included.
http://www.slipstick.com/addins/gallery/index.htm#ffolder

Look on technet for the information on how to rebuild the
Contacts system folder with the "/ResetFolders" switch:

OL2000: Additional Command-Line Switches
http://support.microsoft.com/default.aspx?scid=kb%3ben-us%3b197180

When creating a new e-mail, forwarding messages, etc., and
pressing the To button to get to the address list, then
clicking Contacts, Outlook bombs out with an error and the
whole program closes.  The Contacts folder itself is fine,
and I can create new mail through the Contacts folder, but
not through the Inbox folder.  What's up?