Joined on 1/19/11
Lots of people have been having this issue. Try a different browser. Also try resaving, renaming and/or resizing the image slightly. Hopefully one of those options will get it to work for you.
Do you happen to have Adblock enabled? Apparently it started blocking XHR requests on NG recently, which is used pretty much everywhere, for uploads, etc... was what I was going to say, but looks like this was a pretty old post, whoops!
Don't feel like erasing all I'd already typed, but have a real belated Welcome to the site though! Hope it worked out.