Yes, Photobucket have stopped free 3rd party image hosting with very little, if any, warning that this was happening; I received an e-mail after they'd already pulled the plug. It must have really screwed up those people who've used Photobucket and have project threads on various forums using lots of photos to record the progress of their projects; all these photos will have 'disappeared' from their project thread as a consequence of Photobucket's decision (they'll still be in their Photobucket account though).
I'm using Post Image -
www.postimages.org - simple to use, so that suits me. It was recommended by a member on another forum. I've also read on other forums of members switching to Imgur and Flickr.