When an iPhone is connected, PhoneView will get the image from the entry in the iPhone's contact database containing your iPhone's phone number.
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If it can't find a corresponding entry in the iPhone's contact list, or if the entry has no photo, it will do the same search in your Mac's Contacts app.
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If there's no phone connected, or if it doesn't find a corresponding photo in your Mac's contacts, PhoneView will use the photo from your Mac's "Me" address card. This can be set by selecting an address card and choosing "Make This My Card" from the Card menu in the Mac's Contacts app.