Picasa 3.8 allows uploading pictures to Google contacts. "After scanning photos, adding name tags, go to Tools menu, select Upload and click on Upload People Thumbnails. Picasa will ask if "you want to upload and replace all the thumbnail photos from your People Albums to your Google Contacts". Clicking "Upload", Picasa saves photos to Google Contacts and you can see them in Gmail or in any other app that synchronizes with Google Contacts: Android Contacts app, iPhone Contacts app, or Google Sync."
If you don't want to upload photos for all your contacts, you can right click on a photo from Picasa's sidebar and select "Set as Google Contacts Thumbnail". You can also enable "Upload people album thumbnails to Google Contacts" from Tools/Options/Name Tags (or Picasa/Preferences/Name Tags on a Mac) to upload new thumbnails you select in Picasa.