How is your User Profile service configured? The Person column type saves something that looks like this:
Then SharePoint itself simply looks at your site collection, finds site user #23 (in this example), confirms that the username matches up, and then takes whatever info you've got there for their first and last name going forward. The site collection user list, in turn, just takes the information from your User Profile Service (there's a timer job that disseminates that info that runs hourly by default).
If you haven't set up User Profile Services, or if for some reason you aren't importing names, or if the login isn't on the list of imported items into UPS (for instance, if you've got multiple AD forests but are only pulling from a couple of them in UPS but you've configured your PeoplePicker via stsadm to pull from more), you might only see the login there. It's also possible that your site collection's entry for that login just didn't include the first and last name (for instance, if the user was added before you configured UPS).
Either way, if it's just one user you can always just edit the site collection user entry itself. If it's multiple people, I'm guessing that it's an issue with UPS.