I’m on a 3.3 WP and I was having the same problem. Today WP notifies me a new version of this plugin, 1.4.1, but it seems the update was published on 2011-08-11, so why does the update notification has popped out today?!
Anyway, after the update process, now it works perfectly.
I’m happily using “Taxonomy images” to adding an image to taxonomies terms. It integrates perfectly with WP media management and doesn’t let users to mess up with impagination when adding a taxonomy description.
It uses filters to add image information to standard queries on templates like category.php, tag.php taxonomy.php and all of their derivatives. But it’s really easy to read image/term associations stored in the db as an array and use them as you need.