Everytime someone calls me it says unknown?

I have an iphone 3gs, and EVERY TIME some one from my contacts calls me, their name doesn't come up, it just says "unknown".
I have had my friends try and call me (without their number blocked) and it just comes up "unknown".
How do i make it so it doesn't come up as unknown?

It's annoying because i always have to say "who is this?" and then they are like, "why don't you have my number?"

Please Help ME!

Added (1). Thanks Scott, but i have peoples number and names saved in my contacts. But it just comes up "unknown" when they call.

Stick it up your but

One thing you must do is actually go into the Iphone and add the actual contact. You must put their actual name and address ect for the name to come up. Their should be an app to tap on your iphone called contacts. Their is a little green plus sign and you must touch that after you enter the info for your friend. Once you do this then your friend will pop up on your phone. You have to do this for each person that you know.

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