The iPhone, by default, sorts contact names alphabetically by last name. If you prefer, you can have the iPhone sort contacts by first name, instead.
Open Settings and tap "Mail, Contacts, Calendars". Scroll down to the Contacts section and tap "Sort Order". Then, tap "First, Last".
You may have noticed the Display Order setting (below Sort Order). This is used to determine if names are displayed first name first ("John Hancock") or last name first ("Hancock John").