Had this problem and think I have solved a work round although simple copy and paste we used to have would be so much better to have back - APPLE PLEASE NOTE! - sorry I think that deserves a shout.
I regularly add cd's to my library which don't have artwork on itunes so I search and used to be able to copy the image and paste straight into itunes but not with itunes 11.
Work around I have found is as follows.
Locate Artwork, right click and "Add image to iPhoto library"
Locate album in itunes. Right click and "Get Info".
Double click on the artwork frame and will open window showing your files.
Open photos and locate your saved artwork photo.
Select and click open.
Click OK on the Multiple Item information window and itunes will update the tracks on the album with the artwork.
It worked for me so hope it does for you.
I posted this in another thread having found a workaround this morning:
"I just upgraded to iTunes 11 last night and this problem was the second or third thing I noticed. I did try the copy/paste method and of course I did not see the artwork appear (in Winamp for example). However, I did notice that the MP3 was being modified. Just for fun, I fired up a copy of MP3TAG and noticed something rather interesting. iTunes did indeed insert the album art into my MP3 but it marked it as "other" not "cover". When I told MP3TAG to change it to "cover", the artwork appears.
Either this is a bug in iTunes, a hidden setting somewhere or a new "feature". Either way, I am glad to see that iTunes is still handling the artwork, just not marking it correctly."
I figured it out, I think. There's no little album artwork in the corner to paste to, and when you open Artwork under Get Info there's no right click drop down menu to paste, but if you have found the picture you want to use and copy it from the internet, go into Artwork and just cmd + V. The picture has appeared there for me every time. I hope this helps!
Also, I had a new song on an album that didn't have artwork but all the other songs did, copying this way worked as well. Make sure the picture has been selected (with a blue border) and press cmd + C. Nothing noticable happened for me but when I went to copy it in the way I specified above it worked without a problem.
First select the picture you want to use for album art in Windows Explore and Ctrl-C to copy.
Click on the Albums view
Left-click to select the Album that does not have any album art
Right-click and select Get Info
(You may get a popup with a "Are you sure you want to edit information for multiple items?"
On the Info tab click the check box under Artwork
Right-click on the square next to the check box and select Paste
Give it a minute for iTunes to update the artwork for all titles in the album and you're good to go.
Go to Google images. Type in Artist and Title. of Album or song. Several images of the album cover will appear. Choose the one you like and click on it. Right click 'save image as' and give it a name you'll recognise (some are already named eg 'elvis'.
Right click on tune in itunes, then get 'info'. Right hand box Artwork then Add. Find the cover you've just saved and it will appear then OK.
PS I am useless on computers but found this and it worked e treat for me, even getting album covers from the 1950's.
No need to save the image locally... you can copy from the website and paste directly into the Get Info artwork boxes (Info tab for multiple songs, artwork tab for single songs). That still works as it always has.
Also, remember to open the actual image on the website first... don't copy from the low-res thumbnail.
Finally, if you care about artwork quality, you might want to check out http://www.albumartexchange.com/
When you search for images, typically you will get a page of low-res thumbnails... if you see something you like, click on it and you should get a full-res image opened. Right click on that image, then select "Copy Image". Then go to the Get Info window in iTunes and right click in the artwork window and select Paste. Drag and Drop worked in the old list-view artwork window... not in the Get Info windows.