Something like this started happening to me when I did a backup, factory reset, and then restored all settings on the newly reset system. It seems that it had already sync'd before I restored my contacts, so it was deleting all the imported contacts and replacing them with my backup ones. I had an error come up that told me that I've exceeded the amount of allowed deleted contacts. It then gave me three options: Don't Do Anything, Delete Contacts, Undelete. It kept giving me the same error over and over again, so I finally just chose "Delete" several times.
It eventually went away, but since then, my G1 will not sync the contacts anymore. When I look on the "settings>data synchronization" page, it has an error next to only Contacts, and a note at the bottom that says "Sync is currently experiencing problems. It will be back shortly." I have had the same error since February 4th. I have been dreading another factory reset, but I think that might be the only solution for me.
Is yours happening with ALL sync, or just contacts? Do you get an error at all?

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