Some users have reported an issue in which contacts and calendars from MobileMe do not sync to iPhones, iPads and iPod touches after the update to iOS 4.2.
Turn MobileMe contact and calendar syncing off then back on. Disable both contact and calendar syncing, then re-enable them. This may result in a proper sync (although it may take some time to complete).
Create a new dummy contact. Try creating a test contact on your iPhone then syncing it with MobileMe. It appears that this may force a re-sync and pull remaining contacts from the MobileMe servers.
Use iTunes (workaround). Temporary turn on contact and calendar syncing in iTunes as a workaround.
Knowledge Base article. Try the suggestions listed in Apple’s knowledge base article ontroubleshooting MobileMe sync issues.