Is it possible to display nicknames in the contact list? Is it possible to use nicknames, instead of first+last names, as the contact's display name in the contact list and/or the incoming/outgoing call view?

Device is Samsung Galaxy S 2.

Edit: to be clear, I wouldn't mind installing an alternative contacts app, if there's no other way to do this with the default one.
It is not possible with the default app for contacts. Try Go Contacts which is a rich app on displaying contacts. 

Although the feature you are looking for is available on the default contact display of the MIUI ROM. If you have rooted your phone, consider installing MIUI.