I had the same problem with the black blocks after upgrading to iOS4 on my iPhone. The reason for the black blocks is that the thumbnail images for those particular images have not been created when the Photo Library has been updated to iOS4. I followed the advice on a couple of blogs and fixed the problem.
1. I downloaded iPhone Explorer free software (
http://www.macroplant.com/iphoneexplorer/) so I could view the photo data folders on my phone. I could see that the thumbnail images were missing.
2. I followed a slight variation on the instructions on this blog. (
http://blog.mbentley.net/2010/06/iphone-ios-4-upgrade-restore-lost-pictures-in-c amera-roll/)
3. First I copied the Photo Data folder by dragging it from the iPhone Explorer window to my Mac desktop.
4. Through iPhone Explorer I deleted the info.plist file in the Media/PhotoData/MISC folder.
5. I also deleted the Photos.sqlite and PhotosAux.sqlite files in Media/PhotoData.
6. I then rebooted the phone and launched the Photo Library.
7. The Library rebuilt it's self again and recreated the thumbnails.
8. The problem was fixed!!! Thank you M Bentley!
I hope this helps - this has been bugging me for 2 weeks.
Regards
Alijm23