I can't be sure when this stopped working because I haven't used it for a while, but it was possibly since I upgraded to the 3.2 SDK. In Organizer, when I select the "Screenshots" tab and press "Capture", nothing happens.
I've tried this with three different devices and I've restarted my Mac. What's happened, and how can I fix it?
I don't have the solution for your problem, but here's a workaround:
Use the device to make your screenshots (press the home and lock buttons simultaneously). The resulting screenshot will be saved on the device.
To transfer the screenshot to your desktop don't use slow-ish iPhoto or iTunes to synchronize. Instead import the images using Preview.app. There's a command in the file menu to import images from your iPhone when it's connected.
Hold command-shift-4. Then drag it across the iPhone screen. This key combination give you the ability to take a screen shot with the size you want.