I can understand this is a frustrating situation for you. I suggest your friend speak to an attorney regarding the legal options. There may be legal consequences to what names are/are not listed as the father and/or the last name on the birth certificate, including potential impact on paternity and child support. In many states, however, aside from the paternity issues, the parent is able to designate a surname.
You can find more information about an attorney through the locator service on LawInfo's home page at:
http://www.lawinfo.com/. Some do offer free consultations. Good luck.