OK... so the *228 seemed to fix the issue only temporarily. For whatever reason, a few hours later..all my contacts were gone. I ended up resetting the phone completely (erasing it) and restoring it up via Icloud instead of Itunes. It seems there's and issue with restoring from Itunes that causes the number format issue that we were having. The Icloud restore has been working fine for the last hour...we'll see.
Basically what I did-- backup your contacts to Icloud first, (I actually logged into Icloud on my computor to do this..not sure if that's needed... but I'm not real good with this stuff yet, so I wanted to verify my contacts were there)
perform a master reset-- settings>general>reset>erase all content and settings>erase Iphone
Go thru the normal setup stuff, when asked how to set up phone, select -Setup as new device
when asked if you want to transfer info from Icloud to your phone select Yes and let it do it's thing.
I still ended up having to dial *228 afterwards to get the phone functional... and then connected to Itunes to get my apps and such back.