We are able to create new entities without any issues, but updating an existing entity in a plugin this does not appear to be working. This is for CRM 2011.
You have to mark the object as modified in order to get it submitted to the server. See OrganizationServiceContext.UpdateObject (Entity)
You should add crmContext.UpdateObject(contact); before crmContext.SaveChanges();
crmContext.UpdateObject(contact);
crmContext.SaveChanges();