1. Open Contacts on your Galaxy S.
2. Menu -> More -> Import/Export -> Export to SD.
3. Menu -> More -> Import/Export -> Import from SD.
4. Choose to import contacts to your GMAIL account (this is the very important step!)
5. Wait until your phone has synced.
6. Open Gmail (in your favorite web browser) , go to your Contacts -> More Actions -> Find and Merge Duplicates
7. Wait and your phone will resync. (Optionally, go into Settings -> Accounts and Sync -> Uncheck and Check Sync Contacts to force resync)
From now on when you create a contact, just remember to create it for your Google account and not your Phone!
This method does create a .vcf file of your contact list on the SD but that can be deleted with the My Files app.