I successfully fixed the New Image/Upload in my WP 2.5 yesterday by using the Disable-Flash-Uploader Plugin. Then I discovered that 2.5.1 had been released, so I upgraded. Now the flash uploader also works, but now when I want to "insert into post" the browser starts loading, the window with the filemanager stays open but is emptied and the code is not inserted into the post form. So AGAIN, I can't post images anymore. This is really getting on my nerves.
This worked in 2.5 after installing the no-flash plugin, but in 2.5.1 it is broken. I tested it with the lastest Firefox on a Mac and on a Windows PC.