I use Android 2.3.4 (Gingerbread).
When I go to Contacts > [MENU] > Display options, I see duplicate entries as "email@example.com Phone-only (unsynced)". (1) See left image.
And when I try to add a new contact, I face the same issue. (2) See right image.
Why does this happen? This wasn't there earlier and I noticed this right now. I didn't visit contacts app recently though. I noticed this when I tried to add a new contact.
Adding more to the issue, I can create new contacts and save them inside one of these places, but it'll always display in the bottom duplicate. Even if I select the top duplicate when saving, it'll only display in the bottom one.