Yes, all V4S Mobile Users must necessarily be Contacts in your Salesforce Org.  Before creating the V4S Mobile Users, add all Users as Contacts. Then link the appropriate Contact to the V4S Mobile users. 

Also, each contact should have his/her own unique email ID.  We suggest you to have a unique email ID for all the contacts, is because the OTP is emailed to the same email ID that is there in the Contact record. The OTP is required when the Volunteer has forgotten the password for the V4S Personal app and hits the Forgot Password string on the V4S Personal login screen.