I just got my Windows Phone 7 and added my Outlook, Windows Live, and Facebook accounts to the phone.  The phone automatically downloading and merging all my contacts from each source is GREAT! However, I quickly realized that I ended up with 800+ contacts in my People Hub making it a little overwhelming.  Especially since most of the contacts came from Facebook and a number of them are people who I don't regularly interact with or I don't need them to be in my phone's contacts list. 

So if you're like me and want to remove those unwanted Facebook contacts from your Peoples Hub, follow these steps:

1. Navigate to SETTINGS then swipe right to APPLICATIONS and then choose PEOPLE
   
   
2. Then scroll down until you see a section that says “Include Facebook friends as contacts” and choose the “Only add Facebook info to existing contacts” radio button