On further testing using images from http://www.clker.com/clipart-red-t-shirt-10.html, both the small (100x73) and large (600x440) png images (which get cropped into squares by OwnCloud).
These images don’t disappear when I make a new contact with them and some group information and then modify it on the phone. Several of my currently existing contacts’ pictures, though, definitely did, as documented above. This is kind of weird.
I have tested this on the Galaxy S3 with Cyanogenmod 11 and an emulated Nexus One running Android 4.4.2.