I installed iOS and connected up to my exchange server for mail, contacts and calenders. My contacts have synced but the pictures for the contact are not showing in iOS. However, if I change a picture on an iOS device, the exchange server is updated and the picture shows up on my iPad and iPhone.
I can see the contact images in Outlook 2011 for Mac, and in OWA for Office 365. I am probably missing something as they used to show up before I re-installed iOS 7.