Pixsy is a new engine that provides access to imagery posted on various social networking services, blogs, mobile blogs, and other web sites.
Results pages include thumbnails along with direct links to the image url and the page where the image is posted. I ran a couple of searches and spotted images posted to TextAmerica.com (a moblog service) and Buzznet. I also came across images from sites like the BBC, SF Gate, and Sportsline.com.
The right side of a results page includes keyword ads that often include images. The images appear to come from various web sites and then combined with ads from Yahoo Search Marketing. Run a search for "Las Vegas" and you'll see keyword ads along with imagery of hotels.
Bottom Line: If you use image engines, worthy of your attention. I'll continue to monitor.