Please remove all contacts from the watch’s address book using the app.  Restart the watch and the app and confirm that the contacts have been removed.
Then re-add the contacts making sure not to use any special characters- letters only (e.g. enter Dad not Dad’s Phone).  Enter the number in the +1 area code and number format with no spaces (e.g. +15551231234).
Please also make sure Caller ID is enabled with your provider.