Using image_captcha with no troubles until testing the site on different computers. On Windows versions greater than XP, Transparent PNG image for Captcha comes out broken. I saw a post relating to corrupted bytes on a PNG and it looks like this could be the case here. I did not investigate any further than verifying that all browsers on (say Windows 7) complain that the transparent PNG image is corrupted.
In my cased I switched to JPG and now it works everywhere tested. JPG is fine for me but you might want to fix the outputting of PNG images.