From my understanding Contracts was a choice made because IOI was runing out of time to deliver the Hitman 3 (later to be known as blood money) they were targeting for.
By the time the Sikh controversy hit, Io was already crunching hard on Hitman 3, the intended conclusion to their trilogy. "We seriously thought that the world would grow tired of Hitman after the third game," says Andersen, and they wanted to go out with an ambitious adventure that topped everything they'd done before.
Eight months in, the Io team realized they didn't have a hope of delivering it on time. They quickly called a crisis meeting with Eidos CEO Mike McGarvey.
Their first decision: Put Hitman 3 on ice. Their second: research told them less than 10% of Hitman 2's audience had played the PC-only Codename 47. "We decided to make Hitman 2.5 with some of the best content from Hitman 1," says Andersen, remastering everything via the Hitman 2 engine. With most of the Io team knee-deep in a separate project titled Mercenaries, a skeleton crew went to work and delivered Hitman: Contracts in just seven-and-a-half months.
Source IGN presents The history of Hitman
http://www.ign.com/articles/2012/10/01/ign-presents-the-history-of-hitman