I think I've stumbled across a bug in the iPod Photo v1.1 (it may have been in v1.0, but I just found it so I can't confirm).
If you're playing a song with associated album artwork, and hit the selector button to view the artwork, and then hit the previous or forward button to move songs to a song that does not have album artwork, you get stuck. Previous/Forward doesn't work, you have to hit select (which doesn't actually change the display) as if you went back to the normal view, then previous/forward work.