We have tested this and there seems to be no problem. Could you clear your cache and try again and if you receive an error could you please take a screen shot and provide a link to the thread your trying to add the picture to or the forum section your trying to add a new thread to containing the picture. I assume you mean an attachment via the forum and not an image hosted elsewhere?
That explains it. It's not related to the update. The maximum file size allowed per image is 512.0 KB. If multiple images are uploaded in a post the total for all can't exceed 2MB. For images that are too large you either have to use an image host or use a graphics editor to decrease the file size. Irfanview is a good free graphics editor for windows.
The confusion was caused because the error message was changed. It used to just say file size limit exceeded or something like that.
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