Same Problems
I experience similar problems with IPhoto and my Nikon D70 and Kodak LS443. I first experienced problems when going to Panther and trying to download from the Kodak LS443 using 256MB and 128MB SD cards. The transfer would hang up. I called the expensive Apple Care, and the tech told me to "Just work around it by using a card reader and importing them to a folder on the desk top, then copy them into IPhoto."
I have the same problems with my Nikon D70 using CF cards, no matter what size - 256MB, 512MB, and 1GB. The problem is the same whether the card is in the camera, or in a card reader. My workaround is to plug the card reader into an open USB port on the computer, then when the icon comes up on the Mac, open it and copy the digital images to a folder on the desktop, then drag and drop them into IPhoto.
I'm doing this on a Dual 1GHz G4 with 1.5 GB RAM running Panther 10.3.4, so it's probably not the machine or operating system. More than likely a quirk in IPhoto.
Learned two valuable lessons here. Never buy Apple Care, and buying the upgrade IPhoto CD with all the other stuff I don't need such as garbageband was a waste of money.