I clicked through that same authorization step and it was very clear they were syncing your contacts to their service.
However, this is kind of irrelevant because 99% of users are not going to read this kind of a warning no matter WHAT it says and are just going to click through. They want their Facebook photos on their phone contacts dammit!
What I don't understand here is why everyone is so concerned at all about this. If you have an Android phone, Google has your phone book. If you have an iPhone, Apple does. If you back-up your computer to the cloud, they have it too. As long as none of them share it publicly, why do you care?
If Facebook was sharing your private phone numbers to the world or exposing who you had in your phonebook to people, I'd understand the outrage. But all they did was backup and sync your contacts which seems to me to be a service, not an offense.