I hope she won't mind me writing this, but GTD Wannabe recently wrote a great piece on how she uses Outlook for GTD - it's here:

http://gtdwannabe.blogspot.com/2006/04/mifi-implementation-part-1.html

I found it really useful, and have used many of her ideas.

I personally don't use Outlook for projects, I put them in a database program instead, that way I can keep track of associated notes (web clippings etc) and keep a list of actions for each project, transferring them to Outlook when they become *next*, which is really useful if you know exactly what each step is but they have to be done in sequence. I found there isn't really anywhere in Outlook that I found useful for Project lists - the notes are too clunky to use and tasks didn't work out for me - it became annoying to have this enormous list of projects mixed in with my tasks. But you could always make a new view which doesn't show them - I do this for Someday/Maybe tasks.

How would using Contacts work for projects? Don't you need it as an address book?