Go to the contact and touch edit, then touch add photo in the upper left hand corner of the screen.
I think you can add photos from your comp to the phone through iTunes but I'm not totally sure how because I haven't done it. I think if you connect your phone in iTunes and click photos at the top it will give you some idea.
not to thread jack but i just got the iPhone a few days ago and i am learning as i go , but i have a important question .
why when i transfer pix from my pc to my iPhone through iTunes a lot of the pictures are distorted or mangled for lack of a better term . please help this is driving me nuts . the pictures look great when they come out right but the rest look like crap .