Are your desktop contacts updating in the server side? If it's a local copy, those won't update in the phone. Also, check that Sync is turned on for the phone, as well as for the contacts account. In your sync settings for that account, make sure that sync is set to an appropriate option (either Push or a smaller timeframe). You should be able to see the last time the phone synced with the server contents.
Additionally, if ALL your contacts from desktop are missing on the phone but you're certain they're being synced to the server, check the Contacts app settings and make sure that contact category isn't being hidden.