How does contact management work?
There is a single list of contacts. But smartphones allow many different contact providers (Google Contacts, Facebook, SIM card, internal phone contacts, Skype, ...). But they are all shown within the same app in a single list. A symbol tells you where the contact came from.

I recommend to use Google Contacts as main contacts provider. Don't save contacts on the SIM card and the internal phone memory. Google contacts are automatically synced with your phone and the cloud. You can comfortably edit the contacts @ google.com/contacts. Every edit is instantly propagated to your phone. And if you change your device you simply add your Google account and all your contacts will appear there, too. No more SIM card contact importing/exporting.

In order to solve the problem of duplicate contacts from different contact providers Android provides a 'join contacts' feature, which merges the information from different providers into one single contact.