Several modules seem to be incompatible with image fupload. This may result in two situations:
1) Other modules (such as BOTCHA) do not work.
2) The multiple image upload module reverts back to single image upload.

This is due to the way in which the image_fupload_image_form_alter function is implemented (in image_fupload_image.module).

Solution:

Step 1)
look for the line starting with:
unset($form['title'], $form['rebuild_images'], ....
the comment says // don't need this, title will be generated later using filepath

Step 2)
Ignore the comment and replace this line with :
unset($form['title'], $form['rebuild_images'], $form['buttons']['preview'], $form['buttons']['submit']);
This will ensure that only the stuff we DON'T need in 'buttons' is deleted.

Step 3)
Look for the comment
// Little Hack: Validation fails if body is hidden and wordcount > 0 ==> little hack, look at function "fupload_node_form_validate"
The following line, $form['#validate'][0] = 'fupload_node_form_validate' ;
is *evil*, as it assumes that the first validator is the regular "image upload" one. This is not always the case.

Step 4)
Replace that line with:
$form_val_img_idx = array_search('image_form_validate',$form['#validate']);
$form['#validate'][$form_val_img_idx] = 'fupload_node_form_validate';

Step 5)
You're done. Enjoy the result :-)

Additional notes:
# If you're using the imagefield, be sure to check for similar errors. I haven't debugged that code.
# Be also sure to check my other fixes at http://drupal.org/node/852116 and http://drupal.org/node/924156