Is it possible for SOME positive $c$, $c<1$ to find a pair of COMPACT hyperbolic manfiolds $M^3$ and $N^3$
with a positive degree map $$f: M^3 \to N^3,$$ such that $f$ is contacting with constant $c$? Are there may examples like this?


One can ask the same question of Riemann surfaces, and it seems to me that this should be possible. For example we can take a double cover of Riemann surface with many points or ramification. Though I don't know a proof even in this case. Of course for non-ramified cover the best possible constant $c$ is $1$. 


ADDED. Following the answer of Sam Need, let me give an approximative "proof" of the fact that this works in dimesnion 2. 
Let us triangulate a hyperbolic surface $N^2$ in triangles of very small size, that have acute angles (this is always possible). We want to show that a double cover of $N^2$ with ramifications at vertices of the triangulation will do the job. For this we need a lemma (without a proof).


Lemma. Suppose we have two hyperbolic trianlges, one very small and acute with angles $a$, $b$, $c$, and the over with angles a/2, b/2, c/2. Then there is a contacting map from the second triangle to the first one. 
The lemma is true, since the second trianlge will be large.


Now on the double cover we can take a trangulation that comes from $N^2$ and glue it from these triangles with half angles. Half angles come from doble cover. Then we just need to "adjust" the map.


Of course this is not a real proof, but I am 100% it can be made real.



Contracting  maps of hyperbolic manifolds
In general, for any non-zero degree map from one closed negatively curved manifold to another, there is a canonical map (due to Besson-Courtois-Gallot) called the "natural map". However, it's only known to be pointwise volume decreasing, not necessarily contracting. They call this the "real Schwarz-Lemma". Applying the Schwarz lemma for Riemann surfaces I think gives the contracting map in this case for branched covers. Think of the induced map on the universal cover, which is the unit disk, or $\mathbb{H}^2$. The Schwarz lemma says that any conformal map from the disk to the disk is contracting, unless it's an isometry. 


I thought of one (not very explicit) example in 3-D. Take two simplices in hyperbolic space. There is a canonical affine map (say in the Lorentzian model) taking one simplex to the other. This will be a contracting map for the hyperbolic metric if one simplex sits inside the other **[Edit: actually I'm not sure about this now, but in the example below there exists a contracting map]**. There are finitely many tetrahedra in $\mathbb{H}^3$ which give rise to fundamental domains for discrete reflection groups (see [Ratcliffe](http://books.google.com/books?id=hwQmbllvFMUC&lpg=PP1&dq=ratcliffe%2520hyperbolic&pg=PA296#v=onepage&q=&f=false)). Two of these have one dihedral angle $\pi/5$, with opposite edge angle $\pi/2$ and $\pi/4$, respectively, and all other angles the same. There is a 1-parameter family of polyhedra interpolating between these (basically, just "push" the two faces closer together along the dihedral angle $\pi/5$ edge) which decreases distances. Also, the orbifold fundamental group (i.e. reflection group) from the $\pi/4$ one maps to that of the $\pi/2$ one. So there's a distance decreasing map from one orbifold to the other. Using Selberg's lemma, one may find finite-sheeted manifold covers with the same property. 


