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I saw someone had this problem in version 1, as did I so I just punted and went for version 2 but get the same error after saving (I used the shortened URL, but the embed code fails too):
Notice: getimagesize() [function.getimagesize]: Read error! in image_gd_get_info() (line 349 of /usr/local/www/apache22/data/modules/system/image.gd.inc)
Using a standard image field with display format set to "rendered file". Video full-size image displays and the video plays ok.
GD: bundled (2.0.34 compatible)