I'm going to make some assumptions here:
The photo was either part of a printed photo card, or glued to the inside of a regular card, rather than being just sitting loosely inside like a $5 bill inside a kid's birthday card. Incorporating rather than inserting it into the card is less, "Hey! Here's a picture of me! Just for you!" and more "Hey, here's a card with my picture in it!"
The photo was not suggestive. No cleavage, no gratuitous skin, no come-hither expression.
If both of these are true, then I'm guessing she was poking fun at herself -- here's Ms. Grouchy trying (with the decor and the "Joy" motif) but failing to get into the Christmas spirit -- and that the joke is aimed at the parents, not the kids. A poorly executed joke that the parents may not get, unless they know her Ms. Grouchy reputation first- or secondhand, but not report-worthy unless the photo's content is inappropriate.