On rare occasions, I'll get a message when uploading .png icons. However, I just hit the reload button on my browser, and most of the time, it will load up the icon after that.
I haven't had any other issues though, and I've uploaded a batch of new icons, yesterday, onto a journal. If I come across the message again, I'll c&p. I remember it's like the "You can only upload GIF, PNG or JPG files." message, when it does pop up.
Hopefully it'll get worked out for those who might be having severe probs with it!