Thumbnails are disabled in the samplephonebook for Maemo 5 (maemo5 reports that it supports thumbnails but not avatar, and the samplephonebook requires support for both to enable the widget).

If they are enabled, bugs manifest like:
Saving a contact with a thumbnail results in two copies.
Saving it again after modifying results in a blank contact showing up in the UI (a zero contactId is returned?)