@Switch Blayde
I noticed when reading today's traditionally published genre fiction, contractions were used in the narrative. So times have changed. I use contractions in the narrative.
I agree with this, but I've also defaulted to an 'invisible narrator' in most of my stories, where even if the narrator isn't specified, I used the more informal form including contractions, as it's more in 'keeping' with standard storytelling practices (i.e. it's akin to stories told round the ancient fireplaces whenever visitors would visit from other lands). You use the personal references, by giving the narrator his own personality, so his delivery is more powerful, though if the story was conveyed to him by third parties, there's no need to detail who the narrator is, as it has no basis on the underlying story (which, presumably, the narrator wasn't involved in).
Thus, aside from government or official presentations, I rarely invoke 'formal English' in any of my writing, aiming for emotional impact and narrative flow instead.