The only thing that has changed in my install is the installation of Office 2007 SP1.
When I add a new contact and fill out the first field “Full name…” as: First Last, it will reverse the order of the names. (It considers it to be “First, Last”) I have gone over every name sort order option in Outlook. ALL of them. Nothing has changed but it now has this very annoying behavior. Here is a screenshot of the situation:
http://img244.imageshack.us/img244/5823/mssuckslv2.jpg
Again, as far as I can tell this started with SP1.