So I've followed all the instructions here but when I get to the following stage, I'm never presented with the popup options on the right. That is I never see choices to "keep existing contacts" so by default my phone is syncing over 7,000 contacts from useless "all contacts" area of gmail. Is there a way to force the My Contacts sync only?

And no, I don't have iTunes set to sync contacts with my iPhone. I DO have MobileMe set to sync contacts. Not sure if that could be a prob though.