Profiler mystery with Physics2d

That is called prior to each contact being solved by Box2D but it's doing minimal work there, just storing away the contact information. You should always try to keep the number of contacts being solved to a minimum, however a few hundred contacts should be acceptable depending on the device its being run on.

25% of the cycle-time taken solving hundreds of contacts per step isn't too bad. If everything really slows down then it'll probably be because the number of contacts grows much higher?