Take, Sync, and Share Photos - iConnected: Use AirPlay, iCloud, Apps, and More to Bring Your Apple Devices Together - page 113

Figure 5-15
Whatever image you assign to a contact displays on your iPhone when that person calls
you.
Figure 5-16
Adding a custom image to a contact in iOS. Left: The Share pop-over in Photos. Right:
The screen in which you set the image and assign it.