There is a lot of fraud on Craigslist. The fraudsters are very creative. There is this fallacy, the 'Sunk Cost' fallacy, where people accept a substandard result because they feel they have already invested in the result and don't want to 'throw away' that investment. So in a place where it can take 90 minutes to go across the Bay, if you drive clear across the Bay for what you believe to be a pristine item, you may buy anyway (at a reduced price) because you've already invested the time to get there. Whereas, had the seller posted actual pictures of the item in question, you would have said, "I'll wait for one in better condition to come along."

The "success" of Craiglist is that it exposes you item to a wider pool of buyers, which increases the chance that the one person who really wants it, will see it. And if they really want it they are motivated to go out of their way to get to it. But if even the pictures lie and you don't know what you're getting until you get there, your willingness to take the risk and drive out is reduced, which means people will have items that might have sold if you were trusted.

This happens on EBay too. Sellers list something and it isn't as described, and fraudulent sellers will say "but it is! This buyer is trying to scam me." and EBay usually sides with the seller.

My prediction (and hey, its just a guess) is that if people start using these tools to "enhance" the images they use to sell stuff and it becomes a regular practice, then the total population of people who will use Craigslist will go down and prices overall will be reduced as that fraud gets priced in. Sellers won't get as much as they think they should and stop selling there. If it drops below critical mass then the service suffers.