Step 1: Concept
Law of conservation of angular momentum states $L = I\omega$ is constant.
Step 2: Meaning
If an object contracts, its radius decreases, leading to a decrease in its moment of inertia ($I$).
Step 3: Analysis
Since $I\omega$ is constant, if $I$ decreases, the angular velocity $\omega$ must increase to compensate.
Step 4: Conclusion
The angular velocity increases.
Final Answer: (D)