It will probably also lower the total costs for returned items. You cannot re-ship an item when the plastic packaging has been damaged, even if the item itself has not been touched.
I wouldn't use it either, but there must be some who do. Otherwise I couldn't explain that you can already buy the feature (e.g. http://www.getmycontacts.com)
Please don't do it this way. Google, Yahoo and Windows Live now all have APIs you can access to fetch contacts without having to handle the users credentials.
Getting contacts via delegated authentication should avoid aggravating the technophiles/hackers/security-aware (too much) whilst still allowing you to 'go viral'.
Agreed. It is precisely the experience that allows the expert to maintain the "big picture" in their head without incurring a penalizing cognitive load -- an ability that novices lack.