If you enable syncing of contacts in iTunes, whilst on your iPhone the email sync includes contacts, you'll get a loop that will duplicate contacts over and over. Disable sync'ing of Contacts, Mail accounts, Notes etc. in iTunes and all should be fine.

By the way, to sync Notes on your iPhone, add a Gmail account using your Google Apps credentials (Google Apps should be 'Exchange' for Mail Contacts and Calendars) and sync only notes with that.