The assumption here is that you are using WordPress Version 3.0.1.
I don't know why it suddenly stopped working, but you should check lines 124 to 128 of /wp-admin/includes/image.php and be sure they read exactly as follows:
foreach ($sizes as $size => $size_data ) {
$resized = image_make_intermediate_size( $file, $size_data['width'], $size_data['height'], $size_data['crop'] );
if ( $resized )
$metadata['sizes'][$size] = $resized;
}
If you don't have any way to figure out line numbers, NotePad++ is a free editor that shows line numbers. http://notepad-plus-plus.org/
This code is part of a function that is creating information about the thumbnail that has been generated of your picture.