I think what the OP is saying is that his favorite contacts lost their pictures on the AW. This happened to me yesterday: when I first turned on the AW, my iPhone favorites came over with pictures from the iPhone settings. Because I was not receiving notification of new messages, I simply rebooted the AW, and all of the sudden, 7 out of 11 of my favorites no longer had pictures, only the first and last name initials instead.
I simply deleted the ones that had lost their pictures in the iPhone AW app (under My Watch > Friends) and selected them from the list of contacts, and the pictures came back.
If this is the described issue, try to add one of your favorites in the iPhone AW app (under My Watch > Friends), assuming you have not reached the limit of 12, and see if the picture comes through. If it does, then remove the Friends without pictures and select them from the contact list. The iPhone AW app will sync them right back on the AW...
Good luck!