http://demo.wagn.org/wagn/footype+*tform has:

[[+Picture|{{+Picture}}]] and this is apparently what's causing the problem (uploading through the above seems to be fine).

Go to http://demo.wagn.org/wagn/and_yet_more_image_testing and:

1. click the second "Add +Picture"
2. upload a large photo (240k) and wait for it to finish uploading (could take a minute)
3. click Create

You get redirected to an offer to create "and yet more image testing+Picture" (i.e., it will not have been created).

If it works (it worked once for me), just create a new card and set it to type footype, Create it, then go to 1. above. In case it's something particular to the images i'm using, you can download http://s3.amazonaws.com/demo.wagn.org/card_images/16/Bregenz_Media1.jpg

If you do the upload from the create page — http://demo.wagn.org/wagn/upload_during_create_testing?type=footype — then you don't get redirected, but the file is still not uploaded.