How to use alphabets on keypad in Phone App? - Samsung Galaxy 3 I5801

When I select Phone app and go to keypad tab, on keys I see alphabets besides each number key. How to use them? I suppose it should find a contact already in my contacts. When I type key 7 twice it types two 7s and it doesn't show any contact starting from Q. Note: I've upgraded to Froyo using steps mentioned at http://theandroidfans.blogspot.com/2011/01/how-to-install-android-22-froyo-latest.html