Contacts Issue - Several Contacts are now sorted under the '#' sign

I had an iPhone (original) and recently upgraded to the 3G version. When I completed my first sync, the first thing I wanted to do was call my buddy to tell him I had completed activation. I couldn't find his name in my contact list. I looked and looked, and couldn't find him. Using the new contact search, though, returned his name. Weird right? Well then I realized that at the very bottom, under the '#' in the Alpha Sort-Scroller on the right, was about 150 of my 250 contacts.

Why are these contacts sorted this way? They were not sorted this way on my old iPhone.

Any help would be appreciated!