One slight snag is that you can't enter a contact direct into the table view of the tasks. You have to drag it from the contact folder to the @agenda category heading of the task list to create a blank task for that contact.
If you're dragging a mail to your task list, this will come up as a task form and you can drag the contact into the contact field of the form.
If you're syncing to a palm, you'd also need to drag the contact to the start of the description and add a unique character such as ":"so that searches on the palm don't pull up every reference ni the body of every task note.
It all sounds like a bit of a chore, doesn't it? And you probably have enough of those already!
Keen followers of Bill Kratz may notice some similarities to his rather elegant approach to handling projects on outlook. He takes it further and explains it better than I can, with pictures, at
I think I'll give my simple version a try.