Using a Wordpress 3.x Network. After upgrading to the most recent version, all the images stopped displaying.
On further inspection, the image data is being transferred but the image files themselves are corrupted. Comparing an image sent by the Wordpress wp-includes/ms-files.php script with the source file on the server, it appears that extra white spaces is being added to the image data.
If you are using the wordpress-mu-domain-mapping plugin, verify that the ./wp-content/sunrise.php file does not contain extra lines after the closing php tag.