Actually, yes, I had the most up to date version. There have been no changes in the image_host.php file which is where you try to upload images and where it fails to do so on my previous installation. I had no problems installing the plugin where changes were made in the updated version.
The interesting this is that the post says "Final" and the zip file includes RC1.
To satify your curiosity even further, I reinstalled the plug and reuploaded the files. Set the variables for the administration usergroup how I want them and it still will not allow me to upload even a 43 byte image (smallest I could find).
I have attached images below.
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