1. Select the contact you want to delete.
2. For version 0.8 select "Manage Contact" or for earlier versions select "Show Summary".
3. Select "Menu" -> "Delete Contact".
4. Select "Yes" to confirm you want to delete the contact.
If you don't have version 0.8, I recommend getting it. They have made a lot of improvements in speed and features.
http://www.supware.net/iContact/
They also mention that they changed the button "Show Summary" to "Manage Contact" because the new name is less confusing.