The other big boost to images taking over was the popularity of imgur. Other picture hosting sites were so poor that I think it actually reduced the amount of picture content prior to 2009.
My Gift to Reddit: I created an image hosting service that doesn't suck. What do you think? http://www.reddit.com/r/reddit.com/comments/7zlyd/my_gift_to...
Here's an AMA (ask me anything, reddit interview post) he did: http://www.reddit.com/r/IAmA/comments/y81ju/i_created_imgur_...
Interesting quote from the AMA: "Imageshack tried to buy it 6 months after I made it". I'm sure everyone is glad he didn't sell. IIRC half of imageshack links were "bandwidth exceeded" messages
FYI MrGrim created imgur for both reddit and Digg. He now needs neither though.