I was thinking the exact same thing. It's funny that he wrote that entire post and never raised the possibility of OTHER people sharing their contacts with LinkedIn, and that may explain at least some of the "people you may know."
You're right, I hadn't thought about that. The first person that commented on the blog pointed it out. You're also right, however, that it only explains some of the suggestions they made. It still doesn't explain some of the others, and they still don't make any mention of that in their Help page explaining where they get the data from.