Yep. Take a picture of your contact, or save one, or select one and put it in your camer roll. Open Address book, go to the contact and then press the Edit button. In the box on the left where it has a blank icon of a contact press the picture (you may have to hold it to get a popup). You'll get a popup asking you how you want to set the contact picture. Select the one from the camera roll or take a new picture. Once it's set (you can size the image), then press the done button.