If you launch something like QuipTxt, make it obvious to
people that their images are public
Google Picasa stores images as public URLs without any such warning. Because with random URL's, you effectively have passworded each image. Even more secure than if they were all locked into a nice MySQL database, because then they would all be behind only a single password.I think you don't have to freak out users with too much information. The images are effectively password controlled.
The problem here is that the passwords were too short (and sent in plain text via SMS).