Change global $userdata,$user_identity; to global $userdata, $current_user, $user_identity;
Then change
echo '<div class="login">' . $before_widget . $before_title . "Welcome ".$user_identity . $after_title . '</div>';
to
echo '<div class="login">' . $before_widget . $before_title . "Welcome ".$current_user->user_firstname . $after_title . '</div>';
You can see all the info in the codex : http://codex.wordpress.org/Function_Reference/get_currentuserinfo
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