SharePoint 2010 introduces the Asset Library which is similar to the Picture Library. In addition to storing pictures the Asset Library also stores video and audio. If you are trying to decide between the two for picture storage it can be fairly confusing. This post will try to capture some of the differences between the two in terms of storing pictures.
Note: So far the Asset Library is underwhelming in terms of image storage. Lack of Search support and Office integration make this library not much more than a Document Library with a custom set of Content Types. There may be more improvements on the back end for Asset Libraries, especially for video streaming, that aren't covered here.
The Picture Library does not have the ribbon toolbar. The Asset Library does. The Picture Library toolbar is one of the few places that still has a 2007 style toolbar.
Uploading Multiple Documents to a Picture Library uses Microsoft Office Picture Manager and only displays your "My Pictures" folder. You cannot navigate to other locations on your network without first adding a Picture Shortcut.
Uploading Multiple Documents to an Asset Library uses the standard Office document uploader that is the same one used in a Document Library. You can browse your entire network by default.
Selecting a picture and choosing "Send To" in a Picture Library uses the Microsoft Office Picture Manager and will let you put the image right in an Office document (PowerPoint, etc)
Selecting a picture and choosing "Send To" in an Asset Library only lets you send to another SharePoint Site or to create a Document Workspace.
Note: attempts to add the Microsoft Office Picture Manager features to an Asset Library have been unsuccessful. It will only connect to Picture Libraries
Picture Libraries have a View Slide Show option.
Asset Libraries do not have an easy way to view slide shows.
Picture Libraries have a web service at /_vti_bin/imaging.asmx that includes a number of useful operations including Download and ListPictureLibrary.
Asset Libraries cannot use this web service.
The Picture Library uses the Picture Content Type.
The Asset Library uses the Image Content Type.
These content types have similar fields.
Both have Name, Title, Preview, Keywords, Comments, Date Picture Taken, and Picture Size fields.
The Picture Content Type also has a Preview Image URL field not found in the Image Content Type.
The Image Content Type also has Author and Copyright fields not found in the Picture Content Type.
The Content Class returned for Picture Libraries in Search is STS_ListItem_PictureLibrary
Both libraries will automatically generate thumbnails of the pictures that are uploaded. Both name and store these thumbnails the same way.
Picture Library images will show the thumbnail in searches, while Asset Library images will not.
Note that I've added a blog post on how you can get the thumbnails for Asset Library images in your search results.
Digging deeper, the ows_EncodedAbsThumbnailUrl(text) field, which is mapped to the PictureThumbnailURL field that is used in search is empty for the Asset Library search results. This is likely related to the Picture Content Type having a Preview Image URL field that the Image Content Type does not have. Still, the EncodedAbsThumbnailUrl does exist as a field when browsing All Assets of the Asset Library using a CAML viewer. Oddly a field called ows_ThumbnailOnForm does exist, but contains a direct link to the file, and not to a thumbnail.
The Content Class returned for Asset Libraries in Search is STS_ListItem_851
This post will be edited as more differences emerge.