No complaints
I also have a large number of Skype and Facebook contacts, and the built-in Skype notifications are excessive when Im only interested in being alerted for a handful of contacts. With Skype 5.7, Contact Alerts works well and the Growl integration makes it a useful tool for keeping in touch without getting in the way.
The only caveat Id say is that the Skype API permissions dialog can get lost the first time the app is started - it took me a moment to find the permissions window in the background. Im not sure if this is something the developer could look at?
Toby449 about Contact Alerts for Skype