I turned off "Contacts" permission for Whatsapp to see what happens and immediately all new messages show up with numbers only, no names so it looks like contacts are used for number to name resolution and not necessarily uploaded to their servers.
And since it immediately switched them to numbers-only, it's not caching, which explains why it polls so much. It's likely they didn't want any sort of delay when opening the app, so they found a way to poll regularly without impacting battery life significantly.
Sounds pretty straightforward to me, if that's the case.
