iPhone backs up iPhone settings under \Documents and Settings\<user>\Application Data\Apple Computer\MobileSync\Backup\<guid>, address book is a sqllite db try using sqllite GUI to see the data.
Actually, it doesn't backup all data -- only certain items such as SMS messages and configuration settings. Contacts are specifically not backed up as part of this process, as you're expected to be syncing them via iTunes.
To keep a copy of your contacts on your PC, just setup iTunes to sync contacts with Windows Address Book or Outlook. If this is your first sync of contact data with your PC, you should be given the option to replace the data on your PC's address book, or merge it with the data on the iPhone.
This will not only backup your contact info, but will also provide it in a usable format on your computer.
You must have checked (or left checked) the "Replace" box for contacts further below. This is not normally the default configuration unless it's the first time you've ever synced your iPhone with iTunes, but it's also difficult to say conclusively how iTunes will interact with a Jailbroken or modded iPhone.
I've not only successfully reverse-synced my contacts back to my computer, but I've even been able to move them between OS X Address Book and Windows Address Book using the above method.
1) You need to grep for file containing 'AddressBook.sqlitedb' under MobileSync\Backup dir
2) Next make a copy and hex edit to delete initial few bytes so that file starts with "SQLite format 3"
3) Next use SQL Lite database browser to browse the data,
4) Table 'ABPerson' will have person info and 'ABMultiValue' has phone numbers.
5) Now copying this edited file to /var/root/Library/AddressBook should get back the address book (but if this file is intact iTunes only would have restored)
I manualy type in all contacts to WIN Address Book and sync with iTunes and got back all contacts....Thing is,if U add new numbers with keypad on iPhone ,how do you add them to your backup contacts file in computer?3
OffTopic: My iTunes says that iPhone update is available, BUT it is 1.0.1 NOT 1.0.2, strange...
Once you've got iTunes set to sync your contacts, any changes made to your contacts on the iPhone should automatically be synchronized with your Windows Address Book on your computer (or "Address Book" on the Mac). Just sync with iTunes.
The actual backup of address book data must have been added in either an iTunes or iPhone update, since I specifically looked for it back in the iTunes 7.3/iPhone 1.0 days, and it wasn't there, but I now see four different backups starting from a couple of weeks ago.
Closing thread, it's becoming a spam magnet.