I too had been experiencing this problem. I decided to spend some real time troubleshooting it over the Christmas break. I do realize that there has already been a solution posted to one variety of this problem. I've found another possible cause and thought it would be useful to share with this community.
Here is what I've found:
The root of my version of this problem seems to stem from the fact that my iPhone is integrated with the messaging system at my place of work--Exchange/Outlook. This integration provides a feature that will populate a suggested contacts folder with the e-mail addresses of the people that you frequently send e-mail messages to. Even though that folder is a child of the Exchange messaging conduit on the phone it appears to have some precedence system wide. I confirmed that my friends whose entries were giving me trouble in FmF had e-mail addresses in the suggested contacts folder. Here is what I did to resolve the problem:
1. Delete the addresses from the suggested contacts folder
2. In the contacts app, choose to hide all groups
3. Force quite FmF if it is running
4. Relaunch FmF
After these steps FmF finds the correct contact entry in the Contacts app and does the right thing. I'm even able to reenable the display of groups in the contact app and FmF continues to work as expected.
Hope this is helpful.