djibouti33's answer worked for me as well, but there is one key exception in his steps for the iPhone Simulator folder location.  Below worked for me.
- Quit the iOS Simulator
 
- Download iPhone/iPod Touch Backup Extractor
 
- Run it, and select the last option "iOS Files"
 
- Create a folder on your desktop and extract all files to that folder
 
- When complete, go to your extract folder and navigate to Library/AddressBook
 
- Copy both files (AddressBook.sqlitedb and AddressBookImages.sqlitedb) to your clipboard
 
- Within Finder, select GO on the menu bar and Go To Folder "/user//library/" this is the only way to get to the hidden library folder (at leaset for Mac OS X 10.8)
 
- Go to Application Support/iPhone Simulator.  there will be separate folders for each iOS version (5.0, 5.1, 6.0 etc).
 
- For each iOS version you run in simulator, you will have to copy the two files to each of the iOS Version folders.  Ex: Application Support/iPhone Simulator/5.0/AddressBook/ if you run simulator for iOS 5.0.  
 
- If run against multiple iOS versons, repeat for each.
 
- Run the Contacts application in iOS Simulator
 
Hope this helps!