Not sure if this was just rolled out or if it just hit my account, but when I logged in to Gmail this morning, I noticed the "New Features!" link at the top right. Following the link like the web lemming that I am, I saw that Google added contact pics for e-mail and chat. According the screenshot to the right, Google is in the process of rolling this out across accounts, so perhaps you have this feature already.
I added my pic, so my mail recipients will see the pic if they hover over an e-mail from me. If your friends don’t want to add their picture, you can upload one for them, but of course that pic will only show in your Gmail client. Yes James, I’ve already got your famous cartoon head appearing:
Although this feature isn’t ground-breaking, I like the fact that Google is really adding functions for free that we continue to pay for elsewhere. I can add photos to my contacts in Outlook, which actually comes in handy with the caller ID on my XV6700 phone; but I had to pay for Outlook, didn’t I?