http://www.seroundtable.com/archives/018861.html
http://www.wolf-howl.com/google/ad-format-image-search/

"I am hearing reports from Search Engine Watch Forums that Google is now testing text ad formats for ads on Google Image search.

You can see two screen captures of this in action, one at AccuraCast.com and the other at Michael Gray's blog."

I hate them and I feel they are very distracting.
Image ADS will be alot better, because when a user search for an image that means he's looking for an image if he wants links (type of ADS they are displaying) he'll go to web search.

I hate the last steps Google has taken in displaying ADS on their site, this one and the ADS on Google finance.