I'm writing an addressbook app that uses an ajax call to receive a
list of contacts. All was running well until I discovered that the
client has 250+ contacts and the browser hangs (windows gives 'not
responding') for a second as Javascript draws all the divs etc
required for the information.

My googling informs me that .innerHTML is the fastest method of
insertion so I have been using this. I have tried looping through the
addresses running .innerHTML each time but that was v slow and crashed
the browser. Then I tried joining all the contacts up in to one
huuuuuuuge string and this was a little faster but the browser still
hangs noticeably.

The only method that doesnt kill the browser is to use setTimeout to
space the .innerHTML calls out by a few ms and but this has its own
disadvantages - I have no idea what the optimum delay is.

Does anyone have any advice? Would DOM creation be better if I were to
create all the nodes and then insert or will I experience similar
problems?

If nobody replies with advice before I try it myself I will let you
know.

S = "" ; for (J=0; J<30000; J++) S += " " + J + "\n"

A = [] ; for (J=0; J<30000; J++) A.push(" " + J + "\n") ; A = A.join("")

I find the second four times faster in IE6 XP sp2.

Something on that would be worth having in the FAQ, except that it's
much more often answered than asked.

It's a good idea to read the newsgroup c.l.j and its FAQ.  See below.