Update: 3:45PM There are two fairly reliable workarounds to this issue which have been reported by users:
- Upload and/or edit photos from IE8+, Firefox, Chrome, or Safari. The issue seems to only affect IE6/7
- You Publish Postcan make already-uploaded images display by manually editing the image code from the Edit HTML tab. Just remove the height="0" and width="0" elements and the images should appear.
Update: 11:55PM This is fixed for new uploads. Please see the second workaround above to correct previously-uploaded images.