The images being deleted is incorrect. Grandfathered free accounts are not allowed to hotlink images so any images they have linked on various sites are replaced with that generic advertisement. Free accounts are also not allowed to upload new images and downloading your archive of existing images has been made extremely difficult.
My Imageshack account still exists, as do all of the images, I just can't link them anymore. One of these days I'll have to download them all and put them elsewhere like Flickr or Imgur which are still free.