We have claims based authentication enabled on our SharePoint 2010 environment. None of the account display names are correct for users.
I tried the solution listed here: Inconsistent user names in SharePoint but it did not fix the issue.
Usernames display as "domain\username" when User Profile Synchronziation has not yet been configured or there is issues with the service application / synchronization once it has been setup. Here is the MS TechNet information on how to configure User Profile Sync - http://technet.microsoft.com/en-us/library/ee721049.aspx.
First you have to setup the User Profile Sync service. If you dont want to wait until it will update you can use this approach: Having fun with the SharePoint Welcome.ascx control