Yes it has been removed. People can enter their preferred name I the nickname field which will be used instead of login if it's not empty.

I've entered a [nickname], but when using the contact form it still display the contact name as the [login] name. (Recipient)

Screenshot or URL please so we know exactly where to fix it. Thx.

When Anonymous user send email through contact form:

_msgform.disp.php

The Recipient name display LOGIN name even though a Nickname ('preferredname') has been specified.

$recipient_link = $recipient_User->get_identity_link( array( 'link_text' => 'text' ) );    /*  _user.class.php */

Resolved

_msgform.disp.php

$recipient_link = $recipient_User->get_identity_link( array( 'link_text' => 'text', 'login_mask' => $recipient_User->get('preferredname') ) ); 

When a user comments on a post, the username displays the login name and not the preferredname even though a preferred name is specified.

In that case, we actually wanted it that way. The problem is that any user could type in the login of another user as his nickname. So it would be very confusing and sometimes even a security issue to sometimes display the nickname instead of the login.