Working off of Last Wordz instructions, I have fine tuned the instruction to eliminate several unnecessary steps such as unpairing the watch. Try the following:
0. Backup your Phone via iCloud!
1. Plug iPhone into Computer, uncheck "Sync Music" under the phone sync panel, then hit "Sync" and wait til complete.
2. Close iTunes
3. Download iFunBox (iFunbox is a iOS File System Browsing App) and install the app on your computer.
4. Open iFunBox. Go to the Raw System Storage/iTunes Control and delete everything inside here.
5. Unplug iPhone, restart both iPhone and Watch.
6. Plug iPhone in, iTunes should launch automatically (launch iTunes if not the case) and ask what you would like to do with this "New Phone." Select "Setup as New Phone." (Don't worry, your data is still intact)
7. Re-enable sync on all Music, Movies, TV Shows, etc.. and hit "Sync" and wait til finish.
8. "Unknown Title" playlists should be gone!
Shout out to OG Last Wordz!