The problem is not your friendly name.
The problem is the names of your contacts.
I have included a picture.
Please excuse my image editing skills
As you can see in version 3.40.107 unicode characters were not disabled.
However, because of users putting bold and italic in their names, and because of unicode characters, the name got a little cut-off (I included the "Add Contact" button)
If you want, try for yourself:
Add yourself to your contact list, and then add some japanese characters to your name.
See what I mean...?
Or is it only me...
By the way I forgot to tell that I have Custom Names disabled.