Hidden Contact Subfolders are visible on iPhone after sync with Exchange Server 2007

Hello,
We have encountered an issue where synchronizing the iPhone with Contacts from an Exchange Server 2007 mailbox, causes hidden contact subfolders (from Outlook) to be visible and appear in the Groups list in the Contacts App on the iPhone.  This does not occur with Exchange Server 2010 mailboxes.
We have a 3rd party application that creates hidden subfolders in the default Contacts folder on Exchange Server 2007 mailboxes.  The hidden folders do not display in the Outlook client, Blackberry or on an Android phone.  We did see that they were showing up in Outlook Web Access until we applied this Microsoft Exchange Server 2007 Service Pack 3 Rollup 2 patch unto the Exchange server:
http://support.microsoft.com/kb/2210042 - A sub contact folder is still visible after you set the "PR_ATTR_HIDDEN" attribute to "True" in an Exchange Server 2007 environment.
After the patch was applied, the hidden contacts do not show up anywhere else.  However, when we synced the mailbox to an iPhone and synced existing contacts, all of the hidden folders appear in the Contact Groups list.  Is there a way to hide the hidden sub contact folders on the iPhone and prevent them from appearing in the Contact Group lists?
Any help provided would be most appreciated.
Thanks and Best Regards

Hi SBuchan,
I have an open case with Microsoft about it.  It is an issue with ActiveSync in Exchange 2007 that sends the hidden objects.  Microsoft tried to resolve this in Exchange 2010 by sending a delete message after sending the hidden objects to remove them from the device.  Am awaiting to see if they will approve a design change to Exchange 2007 ActiveSync to prevent the synching of hidden objects.

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