Definitely on outgoing calls the phone should show the image of the person that you actually picked, not someone else who happens to have the same phone number.

Obviously incoming calls are harder. To be really clever, the phone could show multiple images of all the people that match that number, up to a maximum of, say, a 3 by 3 grid.

EDIT: I've just noticed that redex@ich.ms has already suggested the same grid thing on the bug. I'll vote for the bug myself later (I don't have access to my bugs.maemo.org password at the moment).