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are you using your google acct to synch? iirc, google compressed contact pics on my ogevo. maybe if you used the phone's contact list?
Thats how vanilla ICS was on the Nexus S. If you have Facebook if click and hold a photo of someone you can assign it as a contact photo. Plus crop it too. That helped on the Nexus. Havent tried it on the Evo though.They are very grainy when you open up a contact whether it be from contacts, facebook, wherever. For some reason, they are expanding the pic to fill the top portion of the screen (like the facebook cover photo). Horrible design.

I have an idea - no idea if it will help or not, because I don't know how the phone contacts came in in the first place in this case.
But if willing, maybe try:
- export one contact to the sd card as a vcf file
- delete the contact
- import that one contact back