It's possible the update replaced the image viewer (just a guess). You might try resetting to defaults for Handcent before a FR. You might loose any customizations you have set (bubbles, colors, etc.) so do a backup under My Themes 1st. From the Conversation list screen swipe left to get to the Handcent Services screen. Tap My Themes and it should prompt to save a new theme. You may have to create an account first. You will restore you settings from the same Handcent Services page under My Themes.
Once your current theme is saved, clear your defaults. Settings / Applications / Manage applications. Make sure you're on the Downloaded tab at the top of the screen, scroll down and tap Handcent SMS. Tap Clear data, Clear cache, and Clear defaults unless they are greyed out.
Before restoring your Theme try to open an image. If it worked, GREAT! If it didn't work, restore your Theme and contact Handcent. I've dealt with them before, and they are more than helpful.
Good luck.