As Christopher Breen explained in E-mail etiquette, you can use Address Book's Nickname field to set up easy-to-remember names for use in Mail. (At least, you can in Leopard.) For instance, I use nicknames to differentiate between Macworld's leader Jason Snell, and a good friend named Jason (whose last name also starts with an S). To prevent misrouting e-mails, I have Jason Snell set up with a nickname of "the boss" (because, well, that's what he is!) in Address Book. When I want to send him an e-mail, I address it to the boss, and Mail converts this to his e-mail address.
While using nicknames in Address Book is very convenient, there's an associated tie-in with iChat that you may either find useful or frustrating. iChat has three view options for how names appear in your buddy list. By default, you'll see their full names in the list. Using the View -> Buddy Names menu item, you can choose to show short names or handles (their AIM/iChat IDs). If you choose short names in Leopard--or have chosen it in the past--iChat will display that user's Address Book nickname in the buddy list.
In addition to displaying the nicknames, iChat will also file its transcripts (if you've enabled them on the Messages tab of iChat's Preferences) by nickname. If these are features you want, then just make sure the View -> Buddy Names menu is set to Short Names. If, on the other hand, you're wondering why your Buddy List is displaying an odd assortment of names, and your transcripts are sorted by those same names, you'll want to make sure you disable the Short Names option. I ran into this just after upgrading to Leopard (I prefer not to see nicknames in the Buddy List), and thanks to Mac OS X Hints reader bigglesworth for pointing out what was happening.
This story, "See Nicknames in IChat's Buddy List in Leopard" was originally published by Macworld.