I found this on the Dell forum using "contact categories" it listed the same thing you ran into and that I noticed mine is doing last night.
Dell Forum thread
"Kenbuzz replied with the following
Heh. I just figured out the sure-fire way to have a problem fix itself.... post a stupid message to a public board. :D
As it turns out, the Contacts Category db was corrupted. All of the backups (including Dell's) faithfully reconstituted the corrupted db. The way to fix was Hard Reset, restore everything EXCEPT the Contacts db, and use ActiveSync to sync my Contacts from the desktop to the Axim."
Fujiinator -
I am going to do the hard reset myself tomorrow and try this out.
I spent some time gathering all of my access codes for the programs that I have purchased so that I can reload them again.
I am using a Axim X5 400mhz with the A03 update.