Kyle K.,
Yep, you definitely found it! Thanks, that was driving me crazy. There are two places to set the contacts sort, one under language options and one under contact options. It appears that the language option overrides the contacts sort option. The only way to set them differently is for the voice dialing (contacts sort) to be set to last name, first name and language to be set to first name, last name.
Trying to reverse those settings doesn't work. This is definitely a bug that RIM needs to address since the only logical method of having them set different would be the exact OPPOSITE to what you can setup.
So, for the meantime, to avoid having to use VR last name first we have to live with our contacts being sorted by first name. Ah, the benefits of being early adopters. LOL
MT