I've seen many posts about this, but no resolutions that worked for me.
I did an update, clicked upgrade from the admin control panel, and now none of our bloggers' images display. The images are all where they should be, in /wp-content/blogs.dir/files, etc, but they no longer display. A good example is
http://margaret.healthblogs.org.
Here's a specific post with missing image:
http://margaret.healthblogs.org/2008/04/06/conflicting-stories/
NEW users' images are displayed, but they're all going into /wp-content/uploads/image. I stayed up all night trying to get the old users' images to display and I'm stumped! Plus, I don't want all new users' images going into /wp-content/uploads/image, since that'll be a disaster waiting to happen. I noticed that any user can browse those.
This is WPMU 1.3.3