You have to sign into both the Facebook app (if you want to use it) and the Facebook for syncing in the add accounts screen. Give it a few minutes to get caught up and then go through anyone that isn't showing a picture and make sure that the phone paired the contact to the Facebook contact. Occasionally it won't make a logical jump from say Jen X in you contacts to Jennifer Xavier on your Facebook account so you have to manually link the two.
I suggest you consider a third-party for syncing contact pictures. I've found Facebook contacts sync to be just fantastic for two reasons:
1. The pictures display with much higher quality. It just looks great when you're making a call to see a higher-quality picture display when you're making a call rather than a boxy, pixelated mish mosh.
2. I use Go SMS Pro as my texting app, and I could never get it to display Facebook contact pictures for each of my conversations. With the third-party application, they now display and look great!
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