<?php 
/** 
* Sets an image uploaded through the Gravity Forms upload field (not the post image field) as the post featured image.
* Works with the regular upload field and Ajax Upload for Gravity Forms: https://wordpress.org/plugins/ajax-upload-for-gravity-forms/
*
* @author Sallie Goetsch, sallie@wpfangirl.com
*
* Uses Joshua David Nelson's JDN_Create_Media_File class. 
*
* @see https://gist.github.com/joshuadavidnelson/164a0a0744f0693d5746#file-create-image-id-php
* 
*/

add_action('gform_after_create_post_4', 'set_post_featured', 10, 3 ); // Substitute your form ID for the '4'
function set_post_featured($post_id, $entry, $form) {
    $post = get_post($post_id);
    $image_url = rgar($entry, '55'); // Substitute your upload field ID for the '55'
    $create_image = new JDN_Create_Media_File( $image_url, $post_id ); // See create-image.php for this class
    $image_id = $create_image->attachment_id;
    set_post_thumbnail($post_id, $image_id);
}