Not only is this issue a little bit annoying, but when you combine this with the fact that this contact will then get updated in CRM and subequently propagated to other users' contacts folder - well then you have data pollution. First of all, the change log is unnecessary and it doesn't take long before people start blaming "CRM" or the "Outlook Client" for making these unsolicited changes. Second of all, it can in fact make changes that you don't want. Like in the screenshot above where "USA" is being replaced by "United States" where you might have certain standards and/or functionality based on the specific values that appear in a particular field. Third of all, it generates unnecessary updates that need to be uploaded and then downloaded to all other clients ("what? I didn't make changes to those contacts..."). And let's not even mention the cryptic audit comment that is written to the notes that now will appear on all contact records that get updated and if the values get reverted back to what they were previously (i.e. the correct values) this audit will appear again and again...
This particular update seemed to occur only for internal company contact records and not for external contact records. And through various tricks of the trade I was able to verify 100% that this update was not coming from CRM - rather CRM was just the conduit for propagating it as described above. But the problem was that I could not attribute this to other 3rd party software... so it was a little hard convincing the client without another prime suspect.
I finally came across the following forum posting which seemed to describe the issue I was facing to a tee: http://social.technet.microsoft.com/Forums/en/outlook/thread/8fa240c6-fb3b-48fc-b7d4-8a82919e3912
In short, from this posting 2 prime suspects emerged. The most likely one being the "Microsoft Exchange global address list (GAL) synchronization with Microsoft Outlook 2010" feature and this feature can be disabled using Group Policy as described in this article: http://technet.microsoft.com/en-us/library/ff871432.aspx. This presumably resolves the problem globally as it uses Group Policy.
The second suspect is the "Social Connector" feature that is built into Outlook 2010 and which apparently also has this change logging feature. This can be disabled on a client by client basis by navigating as shown in the screenshot below.
As can be seen, the default is "update without prompting" - a little hard to understand why it would have been designed this way. For me personally, and it seems for many others, it could have saved a few gray hairs if the design of this feature gave a little bit more consideration to the user experience.