Well i have also been trying to self solve this issue for the last 4 hours.
Noticed earlier that uploading with either bulk or single media uploader resulted in blue square with ? inside.
Thought it may be an issue with image so resaved as jpeg again (didn't work), reserved as PNG (didn't work), reserved as gif (didn't work), then decided something else was issue so moved on to next phase which looks similar to recommendations made here.
Have reset htaccess, reset plugins, switched plugins off one by one, switched to default theme and manually reinstalled wordpress again (sorry latest version).
All was good on 31st October but something has changed.
One thing i have noticed is that the image is uploading correctly. Even though you cannot see the thumbnail if you click EDIT and get to the screen where you can crop and edit then the image is there in all its glory (is this the problem that the thumbnail is not generating?)
I haven't got hold of my hosts yet to ask them about hot linking but i don't think this is so as trying another site i manage with the same hosts but on the 3.6 version of wordpress uploads images fine.
Any clues, any help much appreciated, there do seem to be a few media and image problems at present.