I can't explain the reason why, but I have been able to duplicate the following problem.
In Panther, the Address Book backup (File -> Back up Database) has changed from previous versions. Pre-Panther if you ran backup there were basically two copies, AddressBook.data.backup and AddressBook.data.previous. In 10.3, you get to name them as you go and could have as many as you would like in one place. The default path is your user's Library -> Application Support -> Address Book folder. You can seemingly make multiple backups easily. As I have lost my contacts several times in the past, I loved this new feature. Generally I do a backup before every time I sync (no pun intended) my Address Book to my Phone. I try to keep a month's backups available.
All was fine till after a month of backups; the backup time and iSync time was taking forever. It wasn't until I noticed my drive space was disappearing at an exponential rate that I started to really look into the problem. After a little thought, I looked at the back up files. Each one was double the size of the previous backup (up to 1.5 Gb!). After clearing out the files and doing a new backup, I was back down to something reasonable, 2Mb.
The Hint: You can do multiple backups, just don't keep them in the above directory. It is my guess that the backup backs up the previous backups. I would suggest creating a backups directory in you User directory and storing them there as you work.
[robg adds: I wasn't able to confirm the problem, but I thought this might help others. On my machine, the default folder for saves is the Documents folder, and multiple repeat backups did not result in increasing file sizes. Still, I thought this might be worth a general heads-up, in case it does affect others.]
Mac OS X Hints
http://hints.macworld.com/article.php?story=20031222032802289