Not directly! (The image hosting has existed for a while; this is just putting a more pretty frontend on it.) The problem (we think) is that we did some backend work on how we handle files, which broke the thing that lets you upload a larger icon and resize it on the site, which broke all from-file uploads. (That's the working theory, at least.) It wasn't an immediate fix last night when it cropped up, so mark put in a quick hack fix (that has since stopped helping, it seems) and will be working on a permanent as soon as he can.

You can upload from URL still, though -- if you don't want to wait for it to get fixed, you can upload the icon to another image host like Flickr and then load it from there.