After I upgraded my iphone 3G to 4.2.1 I noticed that the SMS display only the sending number without the callerID or name. Changing the Regional Format did not fix the issue and I still had no names with my incoming SMS. An easy fix can be used to display sender names within the SMS app.
Do not waste your time modifying your address book to match the format of the number shown with the SMS messages, it will fix the issue with SMS, but you will not be able to see the callerID name for incoming calls X)
For iphones with IOS 3.x or 5.x, just seach Cydia for the term “CallerID” you will find a Cydia app called callerid -format fix for the needed IOS, but nothing for IOS 4. The solution is to take a leap of faith and install callerid -format fix 3.x on your 4.x device. it worked for me without any problems. Now my iphone shows the correct callerID name for all my SMS messages.