Assuming that you are using the stock contact widget - press and hold on the contact widget, release and you will see a small purple paintbrush in the upper right corner, when you see this - tap the icon. This will open an edit screen for the icon. Select the +add new icon, select the size you want by dragging on the screen (1x1, 2x2, etc), then select the image that you want to use for the icon. If you have your contact images stored on your phone just go to gallery and use them as you you would normally for your contacts. Save and done.