To add things to "Contact type", simply click on your name in the upper right corner of ClientLook and select "Setup". Go to "Custom fields" and select "Contact fields". 

Click on "Edit" next to "Contact type". 

Then add your first new picklist item in the "Enter new picklist value" box, click "Add value to list", and repeat until you are done adding values. 

Be sure to click the "Save this field" button when done to save your changes.