I setup Gmail as my default email and everything works fine except it doesn't show my contacts when I compose an email. To get around this I also added my yahoo account and in the mail settings under my yahoo account I unchecked all the boxes except my contacts. Now when I compose a Gmail email it will show my contacts. My question is why doesn't my contacts show up with just having my Gmail account setup? Do I have to leave it this way for it to work correctly?
Follow these instructions to properly setup gmail with contacts on an iOS device.
Setting up Google Sync with your iOS device - Google Mobile Help