It worked for me just now. Mind you, it wasn't about pictures posting, it was about the image button adding the code line to the message field after clicking 'OK' as you were putting together a post, that was turning up a blank result. Moot point now, it seems.
Note: I manually typed in the opening and closing [img] tags to get the baby pick. That's really all that button does, is add the tags for you. So on that front, it always worked.