When adding an image from my media library, the image dialog shows the options Thumbnail, Medium, Large, Full Size (pre-selected) but I’m not able to change this option. A bug with Wordpress???

No, seems with the upgrade to Wordpress 2.7.x the PHPx-GD library is requried to support this feature. I installed it with:

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apt-get install php4-gd
/etc/init.d/apache2 restart

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