That means Google (the makers of Ingress) will get access to the list of contacts I have stored in Google Contacts.

I believe I can live with that :-)

I can't guarantee it's not for anything else but the innocuous reason I can think of for this is the 'recruit agents' invite system (ingress was initially invite-only).

I think it's opened up now, but hopefully they can drop that when/if they ditch the whole recruit agents thing (no idea if they plan to do that).