I actually did have that before, but only for the first contact on the list, no matter which character.
I updated my ATi drivers. Fixed the problem. Have you tried that?
Yeah, I believe it's a really really old ATi graphics card problem that shows up every now and then, as Aaron said, update your driver.
I'll up the ante. 
There is nothing wrong with that Sarrate. It's the MC Escher zone. Might I ask though what Superman is doing there?
I believe the character is firing-off an energy-beam at the baddies.
I have the latest Catalyst drivers for vista. I did a little tinkering and have found that setting SmoothVision Anti-Aliasing to 6X has totally clear out my problem but unfortunately my FPS takes a big hit and makes the game almost unplayable.
Hey Lord S,
That corruption in the contact windows shows up from time to time, although I haven't see it in ages.
Are you already aware of the current known issues with ATI drivers and CoH/V? They're in the link in my sig.
6X FSAA is painful on the FPS hit. As I haven't seen the contact list corruption in a while, perhaps a quick comparison with my current settings may pop something out as different with your current configuration and we can narrow down the cause.
EDIT: And when you installed the latest driver set, did you completely purge the old using the software uninstaller in add/remove programs and use something like driver cleaner?
The 7.2s are using a rewrite of the Catalyst Control Center, so if the old one wasn't purged properly, there could be oddities from that. (Not that the new CCC is all glorious... it's got some quirks that I hope will be worked out with the 7.3s... if they ever freaking show up.) (Ooops... they got released today. I know what I'm doing tonight.)
Be well, people of CoH.
Like some of the others mentioned, I believe it is an ATI driver issue - I have similar effects from time to time with my Radeon card. Besides contact headshots probably, if you select any player, their info window will show similar effects on each portrait.
Anyhow, I have found that it can be resolved by logging out or sometimes powering down and rebooting. I suspect it may be caused by heat or temperature - as I have noticed that it seems to go back to normal after that. Not the best solution, but just a suggestion if the drivers area seems OK.
Nobody "gets" me, Baby! I'm the wind...
Chicks dig Giant Robots!
Time to pop open the case and go hunting dust bunnies. I hear they like to breed in the spaces between heatsink fins (thus NEGATING airflow and causing heat issues).
"City of Heroes. April 27, 2004 - August 31, 2012. Obliterated not with a weapon of mass destruction, not by an all-powerful supervillain... but by a cold-hearted and cowardly corporate suck-up."
http://img353.imageshack.us/img353/7892/picsbv8.jpg
Notice the char pics distortion in the contacts list? Anybody else having that proplem? I made a Petition for it so hopfully it will be fixed.