Yahoo Messenger will be discontinued - After July 17, 2018 you will no longer be able to access Yahoo Messenger. Until the end of November 2018 you can download your messages and images to save to your computer or device

Can I change the display image for one of my contacts?

The display image is part of a Yahoo Messenger identity, and everyone picks their own image.

You can't change or update someone else's photo for them, but you can always send your friend a message if you think there's another one that works better.