From memory, any folders you create WITHIN the Contacts folder (or any other folder for that matter) will not appear on the iPhone. Any new folders you create must be from the root, i.e. at the same level as the existing 'Contacts' and 'Emailed Contacts' folders.
Also, check in the 'Emailed Contacts' folder for any contacts you create on the iPhone - this seems to be the default folder that any new contacts are placed in (see my post above re: wanting to change this default behaviour).
Here are my DNS SRV and TXT records for Card/CalDAV (I added the TXT records since my early post in this thread).
_caldavs._tcp.domain.net. 14400 IN SRV 10 20 443 mail.domain.net.
_carddavs._tcp.domain.net. 14400 IN SRV 10 20 443 mail.domain.net.
Maybe it's not working because your iPhone version is 4.3.2 which isn't out yet
_caldavs._tcp.domain.net. 14400 IN TXT "path=/dav"
_carddavs._tcp.domain.net. 14400 IN TXT "path=/dav"
So basically at the moment, CalDAV is fine and I use it. CardDAV I don't use as I cannot choose where new contacts are placed - hopefully soon.
[zimbra@mail ~]$ zmcontrol -v
Release 6.0.10_GA_2692.RHEL5_64_20101215170845 CentOS5_64 FOSS edition.