Smush.it - the Yahoo! service - is currently down (http://www.smushit.com/ysmush.it/) so I'm not able to do much troubleshooting at the moment.
Smush.it, in fact, is frequently down. It's a forgotten corner at Yahoo!, understandably since it doesn't generate any revenue.
I've looked into running all the optimizations locally, but it's just not feasible using GD (PHP's image processing library). It could be possible with imagemagick, but that's not always installed on shared hosting platforms.
I've also toyed with creating a version for those that admin their own servers which would require pngcrush, libjpeg, etc... to be installed. It would be faster and more reliable but would be of no use to the majority of users.
Assuming Smush.it comes back online in the next few days I'll implement the bulk smush feature that's be long-requested. I'd also be glad to have someone join in on the project, ideally someone with more time than I have. Please get in touch if you're interested in helping to maintain the plugin.
I appreciate all of your patience with this plugin and my limited availability...