And what about contacts? Do they get backed up and restored too?
Yes they will be transfered also.
Can you tell me whats this about the home screen lag? I've noticed that at times, when i toggle between the home screens, they dont move freely. There is considerable lag. It gets fixed only by shut down and restart. Any fixes available?
You will probably have to deal with this a little while longer. Their really isn't a solution for this (or one I know of). I am positive Google will fix this in their Gingerbread 2.4 update coming REALLY soon. Sorry.