This was a great feature of old kmail at kde 3 times. If an email is received from some one that exists in your contact list, and has a picture, it should be displayed on the email header both at the preview window and on the message window if the email is opened. This was reported for kmail 1 (bug 236778), and was reported to be fixed in kmail 2. However, it is not the case for me here.
Just that your contact is not indexed in nepomuk. Be sure that nepomuk works.
I am pretty sure nepomuk is working, since on KDE system settings / Desktop search under Basic Settings tab it is reported that Desktop search services are active, file indexer is idle and Email indexer is enabled. Is there anything else I can do to ensure this?