Please
search before posting as this question has been asked numerous times.
In short, it is no longer possible without adding a custom name for everyone and setting it as their e-mail address.
Switching back to an old version isn't a great idea as they are likely to become unusable in the future....8.5 is already prompting a lot of people to upgrade to 2009.
djdannyp's reply to [Suggestion] Label contact list by e-mail address