Hello KM199,
When you select the Photo Shuffle wallpaper, the images in the Featured category are only going to be photos that work with the "depth effect". The "depth affect" is the design where it allows the image to appear in 3D and overlay the time. This will only work with very specific photos, so the automatically chosen photos in the Featured list will most likely be much less than your total amount of "people" photos. You can see an example image of the "depth affect" in the Change the wallpaper on your iPhone guide, under the "Customize a Lock Screen wallpaper with filters, widgets, and styles" section.
If there's certain photos you want to appear in the shuffle, then you'll need to manually select them. When you're on the screen to create a new lock screen, select the Photo Shuffle option, then choose the "Select Photos Manually" option at the bottom, then choose the All option at the top.
Cheers!