Add contact without using "Google account"?
Disable the Google Contacts Sync app (Settings -&gt; Apps -&gt; All -&gt; GoogleContactsSyncAdapter -> Disable) and reboot, then try adding a contact again.  If this does not help and you have rooted your Android then you can delete /system/app/GoogleContactsSyncAdapter.apk with a file browser (but take a backup first!).
Either way, next time you create a contact you should be informed that the contact will be stored locally.

As far as I can tell this won't break anything else.

However, if you also use another account with sync function like Microsoft Exchange (for hotmail), you'll have to remove that one too. In case of Microsoft Exchange, it's best to remove the entire account, because just disabling the app prevents you from receiving emails anyway.

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