Your iPhone's caller ID feature helps you easily identify which of your friends or contacts is calling you, and affords your friends and contacts the ability to view your number. If either the incoming or outgoing caller ID is not functioning on your device, the problem is most likely the result of a settings issue or a wrongly entered number.
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Outgoing Caller ID
The outgoing caller ID lets people you dial see your phone number. If the call recipient has you saved in her address book, you will show up as the nickname she attached to your number. If a friend reports that you show up as a blocked or unknown number, the caller ID on your iPhone is probably turned off. Turn it on by going to the "Settings" application, selecting "Phone" and then toggling the "Show My Caller ID" icon to the "On" position.
Incoming Caller ID for Contacts
If an incoming call from one of your contacts does not show the nickname you saved for him, you probably entered the wrong phone number in his profile; profiles are accessible via the "Contacts" application. Once you tap a friend's name, the phone number saved for him is listed, and an "Edit" button takes you to a screen where you can correct the number if necessary. If you've accidentally entered the phone number into the email field, move it to the phone number field to so that caller ID will work.
Blocked or Unknown Incoming Calls
If your caller ID shows "Blocked" or "Unknown" when you receive an incoming call, the caller ID is not broken. A caller can have her caller ID turned off, just as your iPhone caller ID may be turned off. When that happens, you are not allowed to see the caller's phone number, and cannot force the number to be revealed.
When you initiate a video FaceTime call, available on the iPhone 4 and later models, your caller ID must be revealed to the call recipient. Even if you set your caller ID to be turned off, the person you dial can see your phone number. The caller ID resumes working as normal as soon as you dial another voice call.