I believe that a person's inner beauty affects other people's perception of their physical attributes. Here's an example. A friend of mine is amazing: considerate, thoughtful, caring, always going out of her way to do nice things for other people with never a thought of payback in mind. If I were to describe her appearance I would say she is stunning - truly beautiful. Someone who doesn't know her and is merely looking at a photograph would call her pretty, but might disagree with me about my use of superlatives. Obviously, my perception is influenced by my knowledge of her inner beauty. In this respect, I would say that all my friends are beautiful.
The reverse can also be true. We probably can all point to an example of a beautiful woman (or man!) who is a real head turner but uses people and is completely egocentric. I went to school with someone like this. I wouldn't call her beautiful when describing her to someone else because in my mind, she isn't. There's a song about this: "She Ain't Pretty (She Just Looks That Way)" by the Northern Pikes. Fun song, good Canadian band. Go here for the lyrics, or here if you want to watch the video (it starts off slowly, but is funny in a late '80s kinda way).