In Outlook 2007, a contact has a field labeled "Display As", which allows the entry of a short name (or nickname) which can be used to enter the address quickly. This works fine, until the Connector (version 5.0.2) synchronizes this contact to the server. When that happens, if the E-mail address for that contact happens to match one in the Global Address List, the server replaces the "Display As" field with its preferred full name. (For example, replacing a "Display As" field of "mel" with "Melvin Belli (email@example.com)", if Mr. Belli is in the GAL.) Of course, that syncs back to Outlook, so the original "Display As" field is lost.
I would prefer the "Display As" field have an equivalent that does not change in the server contact record. If that's not immediately possible, at least stop overwriting the field in Outlook.
Filed in bugzilla as # 25567. Vote for it if you've seen it too.