Suite Album Images - concerned about transfer on upgrade to 4.0
 

I have done an upgrade from 3.8.4 to 4.0 Gold on my test site.
After reading many threads here with issues, I was pleasantly surprised that the process went very smoothly.

However, I have a concern with the Images stored in member Albums.
I had a single Image in an Album... after the upgrade, the image did not show in the Album, but the Album said it contained 1 image.
I uploaded a second image just to see if that would show, and it did... but it still only listed 1 Image in the Album (not 2)... what happened to the original image?

My concern is, I'll loose all member Album Images when I do the live site upgrade.

I understand that all images are now treated as attachments, but are they in the database or the filing system?
Is there location prior to upgrade a critical factor?