I just reached the limit of how many personal contacts you can have. 1024 sounds a lot but if you like to keep yourself safe, it is not really a lot after a few years of playing.
Therefore, the number of possible contacts should be increased so that you can keep keeping an eye on your surroundings. I do not really see a reason not to increase the number as you can already have unlimited entities blocked. I am currently at 2222 blocked entities, which is double and works exactly the same way as contacts.
Alternatively, and since 2048 become filled up eventually as well, if this proves to be too much of a burden for an already terribly performing server, it would be nice to see flags on contacts that were doomheimed or sold or, in case of alliances/corps, closed so that you can easily remove contacts that do not exist anymore. CCP recently introduced standing tags to the Mailing List Member List, which makes it a whole lot easier to manage members of mailing lists and get rid of unwanted people. This leads me to the thinking that similar and more sophisticated tags can be introduced there and inn other places.
Another way could be to right click a label and have all contacts with that label removed.
If we do not get a higher slot number, we should at least get better means to manage our contacts so that we can use the limited slots more efficiently. I just started sifting through 20 pages of red contacts and it really is not an entertaining activity to double click every single character/corp/alliance to see if they still exist.