Index: image.admin.inc
===================================================================
RCS file: /cvs/drupal-contrib/contributions/modules/image/image.admin.inc,v
retrieving revision 1.2
diff -u -p -r1.2 image.admin.inc
--- image.admin.inc	27 Dec 2008 06:58:41 -0000	1.2
+++ image.admin.inc	14 Jan 2009 11:53:17 -0000
@@ -7,6 +7,7 @@
 function image_admin_settings() {
   _image_check_settings();
 
+  $form['#submit'][] = 'image_settings_path_submit';
   $form['#submit'][] = 'image_settings_sizes_submit';
   $form['image_updated'] = array(
     '#type' => 'hidden',
@@ -118,6 +119,13 @@ function image_settings_sizes_validate($
 }
 
 /**
+ * Submit handler to ensure proper image path in image settings.
+ */
+function image_settings_path_submit($form, &$form_state) {
+  $form_state['values']['image_default_path'] = rtrim($form_state['values']['image_default_path'], '/');
+}
+
+/**
  * Make changes to the settings before passing them off to
  * system_settings_form_submit().
  *
Index: image.module
===================================================================
RCS file: /cvs/drupal-contrib/contributions/modules/image/image.module,v
retrieving revision 1.282
diff -u -p -r1.282 image.module
--- image.module	13 Jan 2009 09:39:09 -0000	1.282
+++ image.module	14 Jan 2009 11:48:14 -0000
@@ -724,8 +724,7 @@ function image_get_latest($count = 1, $t
  */
 function _image_check_settings() {
   // File paths
-  $image_path = rtrim(variable_get('image_default_path', 'images'), '/');
-  $image_path = file_create_path(file_directory_path() .'/'. $image_path);
+  $image_path = file_create_path(file_directory_path() .'/'. variable_get('image_default_path', 'images'));
   $temp_path = $image_path .'/temp';
 
   if (!file_check_directory($image_path, FILE_CREATE_DIRECTORY | FILE_MODIFY_PERMISSIONS, 'image_default_path')) {