Editing contacts right from your chat list
Official Gmail Blog: Tip: Edit contacts right from your chat list
when a person is add from your contacts to you gmail messenger list, instead of name the email address is get displayed on the pop up and chat box.
you can change it but it is now made much easier simply move you cursor over the contact, a box will pop up, then you click on the display name a box will appear as you can see on the screen shot,
simply change by desired name you want to call the person contacts you have and hit enter, you are all done,now no need of enter contact list to edit contact information.