boomeraklit seems that in the latest version of wordpress (3.3), the wpg2 button which was previously showing when you added or edited a post, has been removed.
this is therefore not saying that the plugin is broken, but that the latest version has changed the way that it handles media files.
http://wordpress.org/extend/plugins/wpg2/
by changing from html edit to visual edit mode, the g2 button is still showing, therefore enabling it to function as previous.
a trick for newbies!
