If all you are doing is creating contours, my first thought is that none of the functions in Arc Hydro would improve the accuracy or quality of the contours. However, the LevelDEM function might help if you were trying to force the lake level contours and geometry of the lake. The fill sinks function might eliminate minor dips for you and produce cleaner contour lines. If using the fill sinks function, I would limit how much fill is allowed so that you don't fill in all the features such as stock ponds that you might want to show up in the contours if you have some flat valleys. Otherwise, the other functions "artificially" modify the DEM to where you would get erroneous contours.
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