I *think* this has happened to me a few times before, but this time I had Power Pro app installed and verified it. I have "Auto login at boot" set, and suddenly I noticed that CoO are in "Searching for connection" state (rotating dots), all other apps are sluggish, and Power monitor shows 100% CPU utilization. "Cancel connecting" and "Exit" did not change anything. After several attempts of reboot (including taking the battery off for a while), it entered the same state every time immediately after boot. I could not afford loosing the battery charge, so I removed the app, and sure enough, CPU usage was back to normal. I was on GPRS and did not have a chance to check if the problem goes away on WiFi.
N85 Firmware 11.047.53.1, Contacts 1.0.10
Eugene
P.S. will install it again shortly and see how it goes.