I had the same problem and more when MS upgraded my outlook.com account. Blew the whole Microsoft account up. I had to create a brand new MS account and start all over. Luckily I have everything backed up on my PC, just had to set everything up again. I tried everything to fix, even talked to MS level 2 support. As far as I know there is no fix. If you just lost the contacts pics you'll probably just have to put them back manually.
FYI - issue I had were outlook app wouldn't sync, calendar app wouldn't sync, couldn't log into mail, calendar, or people by the app or online. People pics all gone on phone. If anyone has these issues you'll probably have to create a new Microsoft account and start over.