so has there been a fix for this issue yet? Just got the phone last week and discovered that I can't add photos to my contacts on the iphone 4. just as prior posters have said, I can add a photo if it's already in the library on the phone but just snapping a photo to apply to a contact does not save the photo at all. And actually when I did add from the library, it didn't work right away either. Had to do it a couple of times before it stuck.
I wound up with this same problem after upgrading to an iPhone 4 yesterday, from a 3G (other details of setup available below). The phone initially had no trouble synching pictures with my contacts and then, inexplicably, all contact photos disappeared.
I also use MobileMe.
I tried shutting the phone off and restarting it to see if that would rectify the situation, but it did not.
I have found a solution by doing the following:
1. Open Address Book on the Mac. 2. Go to each contact that has a picture and double-click on the picture to go into editing mode. 3. You don't need to actually make any changes; just hit return to default to "OK." 4. Complete this process for each entry that has a picture. 5. Synch your iPhone.
Your pictures should be back, if you have the same experience I did. I am not sure if MobileMe would have eventually synched them back after I completed the photo editing process described above; I preferred performing a synch instead, which worked.
Hopefully this will stick.
Good luck, and please indicate if this worked for you.