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I operate a widget-portal site that uses images from affiliate websites.
Over the past 6 months itís became more and more apparent that anyone who uses the affiliate images has had a drop in the natural G listings.
We have unique content on every page the only out influence on the page is the images as they reside on the affiliates server.
Could these affiliate images really be doing so much damage or is it me being paranoid.
Here's a related thread from last year. Although not directly about images, Google's Adam Lasnik posted in that thread about Google's intentions with regard to affiliate sites, and perhaps you can to some degree, read between the lines:
Thin Affiliate Pages [webmasterworld.com] - with comments from Google's Adam Lasnik