In order to archive a contact, start by going to the contact page that corresponds with the type of contact you are looking for. You can get there by clicking the Contacts drop-down on the left-hand menu, and then either Customers, Vendors, or Employees.
Once there, locate the contact and click the red [x] button at the end of the row that corresponds to the contact. This will bring up a confirmation window; click yes if you want to archive them, or no if you do not. After archiving a contact, they will only appear on the Archived Contacts page. Now that you've done this, you're all set!
In order to un-archive a contact, go to the Archived Contacts page and click the light blue [restore] button next to the contact you would like to restore. Once that has been done, the contact will show back up on the appropriate contact page.