You may try to copy your contacts to the SIM and then use the SIM contacts for the car only. You don't need mail addresses or pictures on the cars phonebook (as if it would work anyway), so this shouldn't be a problem.
The only problem could be the amount of contacts and the space left on the SIM. I can't replicate the problem here with my DZ and the old rSAP only module. This could be a problem with the implementation of PBAP with the/some non-HTC ROMs. I use the stock 1.82.405.1, rooted and thats it. I will try a few things tomorrow with the mail addresses, but the test entry I did today was totally fine, except that the Bolero radio (called RCD 510 by VW) does not know mail addresses.
Just another quick question: is your phonebook only handled by the MFD or does the radio also have the options for synching the phonebook? I only synch via the radio and not via the MFD (much easier navigation than with the buttons/wheels on the steering wheel). I don't know if that makes a difference.
For the internet part: I opened a feature request, but it is too early to say anything. Maybe someone has an idea how to implement it. The modem itself works very well, if you entered the APN correctly in the MFD. I can connect to the internet with my WM6.5 device (MDA Compact V aka Touch Diamond 2) using the BT modem.
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Thanks for the DUN plugin, you are the best!