Hello Sunny,
PROBLEM: We've managed to reproduce the problem by simply copying the .dll files to a bin folder of a web site and then registering the module in the web.config. Namely, since the Contacts module references Sitefinity assemblies (such as Telerik.Framework, Telerik.Cms.Web.UI, etc), it is necessary that those referenced files are of the same version as the one of your web site. So, since I have referenced files on my machine, you can't just add .dll files and that's where the problem is.
SOLUTION: Add the Sample.Contacts and Sample.Contacts.Data projects to your web site and in effect create a solution. Delete the Sample.Contacts.dll and Sample.Contacts.Data.dll from your bin folder if they are still there. Add these two projects as references to your web site. Lastly, open the references for both projects and reference your dlls. So, in Sample.Contacts you need to replace the references of Telerik.Cms.Web.UI, Telerik.Framework and Telerik.Security with the references to those assemblies in your bin folder. Same thing you need to do for Sample.Contacts.Data: replace Nolics.Engine.v4.2, Telerik.DataAccess, Telerik.Framework.
Hope this helps.
Regards,
Pepi
the Telerik team