The class picture had to stay that way, with every kid in the fifth grade holding up a pen while saying "Frindle!" instead of "Cheese!", because the photographer was out of film. It would have been impossible to retake the photo at that point--the photographer was using a film camera, with a limited amount of shots, rather than a digital camera, which can usually take thousands of pictures or more in one day.

We find this out in Chapter 8: "Mightier Than the Sword," as Nick and his fifth grade classmates are getting their group photo taken. He and his "secret agents" had spread the word to the entire fifth grade class, and they'd planned to whip out their pens and yell "Frindle" all at once for the photo.

Although the photo probably seemed quirky and cute to the students' parents, and though it probably showed how well the class worked together as a team when they were inspired to do so, the fifth grade teachers were actually very angry about how the photo turned out. Mrs. Granger, the narrator explains, was furious.

So, we can understand that this class photo incident is important in the novel because it inspires Mrs. Granger to threaten detention to anyone who utters the word "frindle" and to sit Nick down for a frank chat about why he should stop causing a disturbance in the school. In a sense, the class photo contributes to the escalation of the whole "frindle" trend.