I have a peculiar problem. I have 3 sites on a Debian/Nginx setup. Let's call them site1.com, site2.com and site3.com. After upgrading to 7.20, site2.com and site3.com image styles stops being created while site1.com is working. I installed fresh Drupal 7.22 in a subdirectory in site1.com and site2.com (also upgraded all the sites to 7.22). The fresh installations won't create image styles either. I thought the fresh installation in site1.com subdirectory will work since site1.com itself works fine but that's not the case. I'm totally lost here. The Nginx site conf settings are the same for all the sites so I'm not sure it's a server issue. I have spent the past few days reading about this but can't an issue similar to mine.
I just followed the instruction here http://drupal.org/node/244924 to fix any file permission issues but the image styles are still not generated. I also tried this module http://drupal.org/project/image_allow_insecure_derivatives, it didn't work either.