checkout http://sandbox.izap.in. Is this something you are getting. If so, than it is intended to be like this.

this is what im getting, the old version showed normal thumb

also the header text must be using a default text format, my theme doesnt seem to adjust it like the others anymore.

BUT not picking!  this product is great and elgg would be worthless without!

yeah right now imageholder is overlapping the thumbnail displaying as a background via css. That is small css problem. Would be fixed in next release.