I have just started getting this on my iPhone 4S this week - mine are also relocated to the "F" listings - I am able to delete these false entries which show under a new "phonetic first & last name" category, but they always come back within a minute or two.
I then tried using iTunes to Restore my iPhone and thought that it had cured it, but the same thing occured.
Looking at how recently this has started ,I'm guessing that it's a bug - just upgraded last week to ios 7.1.2 so I'm guessing that's the cause and assume that Apple will be sorting this out PDQ!!!
Just to note that I am also using Yahoo based email (well Sky actually - but uses the Yahoo platform of course). Hopefully unrelated but I have also just installed the "Find My Friends" app this week and also linked my Calendar to my wife's iPhone 4S and that is causing a few issues as well.
All very odd and disappointing as I've never had any issues with my iPhones till now and I started using them 5 years ago!
I'm sure Apple will sort this out quickly though 😉