don't worry, it is definitely the contrast. at least i had the *exact* same problem with a velo 1 before finding out this trivial cause

i'm mentioning it only because it was absolutely the same problem as you describe yours.
try to change the contrast settings with the hotkey combinations on the keyboard. you sure they're correct?
or do a hardreset as Yoldering suggests, that should restore the original
(and correct
) contrast settings. or not... it didn't in the case of the velo 1

but the settings are software based with the jornada 720, not hardware as with the velo 1...