If the Handheld Contact app command for 'Delete All Contacts (native app)' is not working properly and you want to delete all Contacts from the device, here is the best option to do so:

1. Sign up for a free Gmail mail account - something like youriPhone123@gmail.com for an example. Or use an existing email address that isnt used for syncing Contacts.
2. Connect iPhone/iPad to iTunes and select the 'Info' tab.
3. Under 'Contacts' set it to sync with Gmail addressbook (which will/should be empty) enter your Gmail name and password when prompted, then click sync.
4. iTunes will then copy all your phones current contacts into the new Gmail mail address book.
5. Log in to the Gmail mail account and you will see all your phones contacts - tick the box and 'Delete All'.
6. Follow steps 2 and 3 again by connecting and syncing within iTunes, only this time it will delete all your contacts in order to reflect what has been done in Gmail mail.