Windows Live Mail cannot directly manage nor update contacts to an iPhone but there is a workaround for anyone wanting/needing this capability:

When attempting to sync the lost contacts from Windows Live Mail, I found that the iPhone would not accept new nor edited contacts, using iTunes Sync of course.
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1. Windows Live Mail doesn't 'talk' directly to Windows Contacts...it has its own Contacts.
2. Windows Live Mail is the de facto email client for Windows 7; it's buggy and overdue for an update
3. iTunes Sync doesn't 'talk' directly to Windows Live Mail contact database, just Windows Contacts...

After talking to both VZ and Apple iPhone support it was evident that there was no simple usable contact sync/manager available... Eventually I stumbled onto a thread regarding the problem, and here is my modified version of the geeky workaround for the syncing problem above that works for me.

In Windows Live Mail, export CSV to (temporary) transfer file (check all fields...) Run wab.exe, delete existing contacts, import CSV transfer file Attach iPhone to iTunes, pick iPhone device, pick Info, check Sync Contacts with Windows Contacts; at bottom of page, in Advanced, check Contacts, Apply