Yes, after you upgrade the app, you will be prompted to backup your contacts as a precaution. This backup is stored locally on your iPhone in the vCard format. You can view your backups by going to Contacts Sync > Contacts > Backup Contacts. Please note that the backup does not include groups and contact notes. That will be fixed with a future update.
In addition to the backups made by the app, syncing contacts in itself makes a backup, given that your contacts will exist in 2 accounts, such as iCloud and Google. Both iCloud.com and Gmail.com.com allow you to restore your contacts as well.