A new feature in Google's Picasa image management application, which is incredibly good at identifying faces, allows you to set Google Contacts photos for every contact you have a picture of in a couple clicks.
All-things-Google blog Google Operating System spotted the new feature this morning, and using it is very simple. Assuming you've downloaded the latest version of Picasa, and you've tagged people's faces in photos, just navigate to Tools -> Upload -> Upload People Thumbnails. Picasa will upload thumbnails to your appropriate Google Contacts, which will then be available in services like Gmail as well as other tools that you use Google Contacts with — like, for example, your iPhone or Android device. If you'd rather just upload images selectively, you can do that too (click on a person in the Picasa sidebar, right-click, then select "Set as Google Contacts Thumbnail").
Upload Picasa People Photos to Google Contacts [Google Operating System]