Here's what worked for me to fix this:
SSH in (or use iFunbox) to wallpaper file on device (Library/Wallpaper/iPhone...). Copy all photos to computer desktop. Delete all those pics from iDevice. Respring. Go back to folder and copy/paste pics back in from desktop. Respring again. Done. Weird fix to weird problem - but it's worked on iPhone 5 and iPad 3 so far.
Or, I've also created a folder (any name) in the Library/Wallpaper location (in iFile), copied the pictures into it and then deleted all the pictures in the iPhone folder. Respring and then copy the photos from you temp folder back into the iPhone folder. Respring again. This fixes it too - and you don't have to use the computer.
Marilyn