I think I have managed to get to the bottom of this one, but I think it
might need to remain open depending on whether a few things are true or
not ...

I changed the default theme of Empathy from Classic to the Blue theme
and suddenly everything has started working. If I try to change the
theme to either Ubuntu or Classic (the two themes that I prefer to use),
I get the resultant behaviour that I reported upon creation of the bug
report.

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https://bugs.launchpad.net/bugs/1024693

Title:
  empathy does not show contacts and performs very sluggishly

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