I get this same error, but only when connected to Wi-Fi. I turn Wi-Fi off and it works.
Coincidentally, the same thing happens with my Office365 account (Microsoft Exchange ActiveSync). My contacts don't update and I have to delete and re-add my Office365 account but it will only connect to the server and add the account if Wi-Fi is off.
Hi Joe,
I solved my problem for 50 % by disabling my Exchange Active Sync account for mail, contacts and calendar and uses only my normal Microsoft account instead .