Ever since I upgraded to 3.1, some of my audiobooks have album artwork that looks like a "Genius-generated album icon" as seen in the attached image. I also have this problem with some of my music.
Just thought I'd also share: If I remove the artwork (which shows up correctly in iTunes), sync, add back the artwork, sync again... It fixes the first album, but the issue moves onto the next album.
I have this same problem. It shows the "genius mix" and video podcast stills as artwork's for two of my same albums. I thought it might be an itunes 9 issue, but i tried synching with older ipods, and the artwork doesn't get replaced there (possibly because genius feature is not available on ipod 5.5 gen)
I have the same issue, it is happening a lot, even in some cases my album artwork changes to my podcasts artwork. This problem is with iTunes 9 and iPhone OS 3.1.
I am yet to try it but from what I have read going back to iTunes 8 may fix the problem. If not you could wait for Apple to release a fix.
It's extremely frustrating issue, my friend has iTunes 9 and an iPod Touch with OS 3.1.1 and he has no problem.
I think I might sit tight and wait for Apple to get a move on.