Out-File presents information basically exactly as it would show up at the console (including using the same console width, if I remember correctly.) If you want to allow really long lines in the file, you can pass a large value to Out-File's -Width parameter. Or, alternatively, you could use something like a CSV file instead. The difference there would be whether you intend for a script or program to read this data later, or if it's meant to be more readable for people instead. Format-Table produces a human-readable format, but one that would be very annoying to have to read in with a script. CSV is intended for programs and scripts to parse, and can be opened directly with programs like Microsoft Excel.
out-file \\x.x.x.x.\backupemail\users\$strname\contacts\contacts.txt -Width 100000