Executing the query "UPDATE STATISTICS [dbo].[Contact] WITH FULLSCAN ..." failed
there could be many reasons for this error

it can be a corrupted index or data corruption in your database

check this post https://stackoverflow.com/questions/1175244/sql-server-error-on-update-command-a-severe-error-occurred-on-the-current-com

and this post

http://sqlanddotnetdevelopment.blogspot.com/2011/03/severe-error-occurred-on-current.html

Microsoft has a FIX for this problem, they say if you get this error while "You update the statistics of the table." then this fix is for you... they say This issue occurs because the database engine is trying to load dangling statistics, check this link its a Cumulative update 

http://support.microsoft.com/kb/2498796