Okay there are two issues going on in this thread. One is the all caps issue, and the other is when ios capitalizes common words that are also names in your contacts. I'm writing about the second issue.
A quick review of your contacts will show all kinds of common words that are also names, like Fine, White, Trainer, Day, Gray, Robin, Temple, Rose, Head. These are names AND they are words: fine, white, trainer, day, gray, robin, etc.
You can turn off Auto Caps under General --> Keyboard. That works! But if you do that then you have to capitalize the first word of every sentence after a period or a question mark.
Apple, if you are listening, the answer is simple: Under "Auto Caps" there should be an option: "For Auto Cap of words that are also names, don't capitalize." I would much rather have to capitalize the name of someone than constantly remove the capital letter from a common word. Hope this helps. Would love to hear from Apple, when they are going to fix this annoyance.