Hi there idoks,
To confirm, this happens with multiple photos you try to use, correct? We want to make sure this is happening to multiple possible wallpapers or a specific one.
If it happens with multiple photos, the next step you could take to try to resolve this would be to restart your iPhone. Restarting can refresh the iOS, which can sometimes help resolve issues. If needed, the steps below show how:
"How to restart your iPhone X, 11, 12, 13, or later
- Press and hold either volume button and the side button until the power-off slider appears.
- Drag the slider, then wait 30 seconds for your device to turn off. If your device is frozen or unresponsive, force restart your device.
- To turn your device back on, press and hold the side button (on the right side of your iPhone) until you see the Apple logo."
Those steps are from this article: Restart your iPhone - Apple Support
After those steps, if this continues, you can contact Apple Support for further assistance. You can reach out with the following link: Contact - Official Apple Support
Take care.