IPhone – Best way to transfer iphone contacts away from Exchange server

The data stores can get confused. It's usually a server issue but you seem to have narrowed that out by the details you posted.

Giving the iPhone a totally fresh database then re-establishing sync often helps when the databases are failing to sync correctly.

Since there is no way to just start over for contacts only, you have a short dance of steps.

1. Disable all contact syncing over the air.
2. Power cycle the phone
3. Use a test account (i make a new user account on my mac with an empty address book) - syncing from iTunes to overwrite all contacts stored on the phone clears the data store well. You can have iTunes only overwrite the contacts and not affect any other data on the iPhone.
4. Sync back to your main iTunes if desired, then finally re-enable contact sync over the air.

Since the contact database gets restored from a backup, restoring the phone won't cure contact database errors. If you can re-set up the phone, you could restore and set it up as a new device also.

I'm using Google sync, which works like an Exchange server, so my experience may not be 100% the same as with a full Exchange set up.

I had to import all of the contact to the server (I did this through the Apple contacts app on my Mac) then synchronised them from there. I deleted all of the contacts from my iPhone to prevent contacts being displayed twice. So in short I'm not sure that it is possible to synchronise that group at all.

FWIW I also disabled synchronising contacts with my Mac through iTunes, leaving Exchange to handle all the contact syncing.