I use Apple Address Book on my iMac and I use Contacts on my iPod Touch. I use the display order of "Last, First" on both, but on the iPod Contacts it results in "Last, Middle, First" instead of "Last, First, Middle". Address Book does not have this problem.
This issue occurs in iPhone 3.0 and occurred in my last version, too, although I don't recall precisely which version that was.
Does anyone know if Apple is aware of the issue, or how to fix it?