Hey Tiger,
When I go into my people tab and select the person I want to add a photo to, I hold my finger down on the contact I'm choosing, then I choose "edit contact." This brings up all the different fields that you can edit for your contact. Like Vols1 said, there is a camera icon on the top left of the screen, and by clicking on this icon it will prompt you with the options to select a picture from your camera, gallery, etc.
-OR-
You can also look at pictures that are already in your gallery and hold your finger down on those, then select "set as" and you can choose one of the following: Contact Icon, Favorite, Footprints, or Wallpaper.
Those are the only two ways I've figured out so far. Hopefully one works for you.
As a rule of thumb, I often times find that if I can't find the option I'm looking for by seeing it on the screen in front of me, or by using the menu button, if I hold my finger down on it many times you'll get another menu full of options that you didn't know was there.