Sometimes it appears the sort on the contacts is not working. This is most likely due to the fact that the sort field being used is blank. To correct this, change the sort field to the “Full Name” field instead of the default which is “File As”. To change the sort setting for contacts perform the following steps:
From the contacts display click View > View Settings
From the Advanced View Settings dialog box click Sort
Click the drop down to the right of Sort Items by and choose Full Name. Then click OK.
Click OK again on the Advanced View Settings box.
Your contacts should now be sorted by Full Name.