My iPhone contact list keeps getting replaced by the one in the iphone I sold?

I recently got the new iphone 5S. I sold my older 4S to a friend's son. He did not have money for a data plan so I turned off data in the settings. I deleted apps that might have had personal information in them. I also emptied my address book, signed out of e-mail, and so on. I was very careful about it. He put his simm card in it from his prior phone. I did not do a factory reset because I thought without an iphone account he may not be able to get any apps.
Since then, I have signed up for their dang iCloud business.
Now for the question, every few days this week, my Contacts list will disappear and be replaced by his. I have mine backed up but it's still quite annoying. I'm paranoid about calling apple to complain because I don't know what the rules are on this kind of thing and if they will try to force him to have a data plan or disable the phone somehow if they find out the phone is being used by someone. I tried backing up my data to the cloud and also tried resetting my iCloud/apple password. Nothing has stopped the problem.
Why is this happening? What can I do about it?

It's because you have iCloud enabled on his iPhone. Also if you didn't sign out of your apple id and didn't restore it, couldn't he buy apps with your account. Also he can simply create an apple id if he doesn't have an account.
Right now, you have 2 options:
1) Tell him to turn off iCloud.
2) Turn off iCloud on your iPhone.

Do a complete factory reset on the kids iPhone 4S, it won't mess up anything. He will still be able to use the cellphone even without a data plan, if you can you should also change your Apple ID password.