How do I grab the contact list of a windows 7 phone for use inside a win7 phone app?
Unfortunately, the contacts API is not exposed in the current version of the API. The closest you can get is using something from the Tasks namespace:
http://msdn.microsoft.com/en-us/library/ff428753(v=VS.92).aspx
The two you can look for are the PhoneNumberChooseTask and EmailAddressChooserTask.
alternatively, since all WP7 phones use the live contacts to sync over the air, you could always just investigate doing a web request and accessing the Windows Live Contacts API. I understand this is probably not what you're looking for, but it's probably the best option right now.