Facebook also asks for your E-mail to be connected. What they are looking for is your address book. As for contacts what they do is ask permission to access the contacts on your phone. Once you give the OK, FB copies all contacts and keep them in the database.
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Facebook have your email address, but the connection is also optional. If anyone allows them to enter phone book and email address book, that is very irresponsible and scary at the same time. As if it is not enough that Google knows almost everything about you. Surely the protection of private data is important and will be more important in the future.