The contour lines should be a single line per interval unless you've specified a value for "Maximum vertices per feature" but I don't think that is the case because you are having the same problem with ContourList.
What version of ArcGIS are you using, how many columns and rows is the input raster, have you set any environments?
Could you zoom to an area which includes a few of these short segments and take a screen shot of the contours, symbolized on something that'll show them as segments, and the input raster.
Could you post the output from ContourList (i.e. zip and attach to post)?