At 10.0 you will need to use arcpy.mapping to update the picture as you go from page to page. At 10.1, we've added picture element properties that allow you to reference a field in a table.Here is some sample code for 10.0:
import arcpy
mxd = arcpy.mapping.MapDocument(r"C:\Project\project.mxd")
pict = arcpy.mapping.ListLayoutElements(mxd, "PICTURE_ELEMENT", "photo")[0]
for pageNum in range(1, mxd.dataDrivenPages.pageCount + 1):
mxd.dataDrivenPages.currentPageID = pageNum
photoField = mxd.dataDrivenPages.pageRow.picture #picture is the name of the field in the index layer
pict.imageSource = photoField
arcpy.mapping.ExportToPDF(mxd, r"C:\Project\OutPut\Output" + str(pageNum) + ".pdf")
del mxd
