I’ve just installed a fresh WordPress 3.3.1 and the theme and I’m playing around with the images. I don’t have any plugins installed.
Well, that eliminates about 90% of what it could be.
I’m running locally.
Could be this, due to your PHP configuration, but the fact that it’s fine on TwentyEleven makes me scratch my head. (I’m not surprised about TwentyTen.) Maybe Josh or Prasanna or someone will have something more intelligent to say here.