I have the same problem too..
But mine is only some of the thumbnail images broken.
When refresh the page, the thumbnail images recover back, but some still broken.
wordpress version: 3.3.1
plugin version: 2.2.3
* tried with 2.2.4 (same problem)
I have try to edit the code as below
go to line 94
src='.urlencode(str_replace(get_option('siteurl'), '', $cg_img)).'
if this doesnt work, then replace it by
src='.str_replace(get_option('siteurl'), '', $cg_img).'
But nothing changes, the problem still there.. anyone help??