Updated to iOS 5 and now photos sent with text message show as sent, but are not received to an iPhone that has not been updated.
This is being caused by using the same Apple ID for iMessage. To fix this you have two choices:
On all but one of the phones go to Settings>Messages>Send & Receive, tap the ID, sign out, then sign back in with a different ID. Note: you can still share the same ID for purchasing in Settings>iTunes & App Stores; or
On all of the phones go to Settings>Messages>Send & Receive and uncheck the email address(es) shown under "You can be reached by iMessage at".