Ok so I think I fixed it. Basically under settings you have the iCloud, messages, and store. Under the iCloud and messages you need to have the same Apple ID. Under store you have the Apple ID that your family shares for purchases through iTunes.
Now you need to make sure that in contacts all the email addresses match that persons email address used for the messages and iCloud. If not the name displayed when you receive a message will be the name of the person associated with that email.
Confusing but now it all works.
So in summary all things need to match in iCloud, messages, and contacts.
Hope that helps.