I've asked this question on the Office365 forum, where I was pointed to the Office for Mac forum, before finally being pointed here. I do hope this is the right one this time!
I use an exchange account with Office365. It has always worked perfectly with Outlook 2007 on my PC, and when I added contact pictures in Outlook they appeared on the contacts on my iPhone perfectly.
I then connected Outlook 2011 on both my office iMac and home MBA to the exchange server.
At first, everything seemed fine, and all of the contacts downloaded into Outlook 2011 on both Macs perfectly. Then all of the contact pictures in Outlook 2007 and on my iPhone started to disappear. They're still visible in Outlook 2011 on both the MBA and the iMac, but no where else, including OWA. It seems that when Outlook 2011 downloads the vcards from exchange, it strips out the pictures and stores them somewhere else. It then syncs back the contacts, minus the pictures, to exchange, which clears the pictures off any other attached device (but not the Outlook 2011 on my other Mac).
Interestingly enough, I have the same problem with Notes (Synced with my exchange server using IMAP on my iPhone), where notes added to Outlook 2011 stay in Outlook 2011 and don't get synced back to my iPhone, but notes added to my iPhone get synced to Outlook 2011, and then vanish from the iPhone.
I switched from using GMail to Exchange to get away from sync issues with Outlook 2011 because I thought the GMail issues were because Outlook 2011 was Exchange focused, but at the moment it appears the only way I'll be able to reliably run Outlook on my Macs is to run Outlook 2010 for Windows in a Windows emulator of some sort, which is a far from ideal solution.