If I'm correct its because you guys have contacts under ADVANCED* checked and that will replace all contacts on you iPhone. So the next time you guys want to sync your contacts from your iPhone to your windows address book or whatever it is. Make sure under advanced contact book isnt checked. After doing so all contacts from iPhone will sync to comp address book and the next time you sync from pc to iPhone it will automatically update your contacts in the pc address book. Hope this helps.
P.S. - Don't worry about the 5% warning thing its really is nothing!
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