As reported by Danny Thorpe, Microsoft has released it's next version of the Windows Live Contacts Control beta version 0.2. It has significant improvements over it's predecessor, most notably speed. The new version loads contacts using a completely new method making it load light years faster than version 0.1.
If you'd like to incorporate the Windows Live Contacts gadget in your project, consult with the API reference. An updated version of the Start a Party demo mashup (*cough* that I wrote) was also released. You can download the source code to Start a Party and it might help you get started.
Congratulation to Danny for his hard work on this release!