I was getting really frustrated because about half of my files had "Unknown" in the artist field. The problem, as far as I can tell, has to do with mp3s with bitrates over 128 kbps and being converted to WMAs (I used WMP for file management and syncing). When I converted all of the mp3s to 128 kbps and updated all of the ID3 tags before syncing, it worked like a charm and everything appeared perfectly. (There's shareware out there than can do this conversion.)
Caveat, it is quite time consuming, but was totally worth the effort for being able to navigate through my files easily.
I still haven't found an easier way to do playlists though. I create the list in WMP and save it as an M3U file. With the player in MTP mode, I sync all of the files, then switch to MSC mode and transfer the M3U file to the "Music" directory with My Computer. Again, it works, but is time consuming.