MicrostockGroup

That is pretty cool!  Should make it alot easier for buyers to scroll through alot of images instead of waiting for individual pages to load.

We tried this approach in the summer after seeing this approach being picked up on some sites, notably Bing's image search - however our own usability tests indicated the net effect on efficient browsing is ambiguous - yes there's no clicking paging buttons, but you still need to click and drag the vertical scroll - actually a more cognitively complex action: instead of a single click for the next results, you have a click and an X-Y dragging action, not only with the page scrolling but new content appearing in relation to your mouse actions.

The main issue seemed to be that it's really hard on the brain and eyes to mentally "file" the positions of a grid of images you've never seen before, then have them slide upwards in non-exact way and you need to re-relate them to the new images that have appeared. Causes a brain-fart after a while - at least in some users, probably some people are more able to work with results like this than others.

Here's a quote regarding the overall merits of this type of nav system which I can relate to:

I personally rarely use the scroll wheel unless I see a very long text, like a blog page. Many users combine the two scrolling methods. In fact when I visited this DT example the first time, I obviously missed the instruction "scroll down" because I could not see what the new feature was and left after a few moments. 

Every web user has different habits and while there is no average user, there is an average of usability - if X% of your users come to such a page and think "hm only 20 images in the results" because that's all they see, and no expected page links, then that's an issue.  Anyhow time will tell if Bing, etc. determines these faults override the benefits of infinite scrolling.  Perhaps Bing leading the way will create a familiarity that paves the way for others to use this method with less friction.

The two points you mention are both very easy to address:
Just put a numbering scheme (like 1 of 12633) in the front of each line or beneath each picture. Done.
The total number of files matching the search is known in advance, you could simply show it and where you are in the list.

I think the scroll thing is a non-issue.  I would think that the majority use the wheel on a mouse and a simple flip of the wheel will get you 20 new images.  Many stock sites have enough results that you have to scroll down to see page one anyhow and in addition - click page 2.  Dreamstime has simplified that and just shows a never ending page 1.  When I do image searches i always put the image count to the highest possible number so that I have to click 'next page' as few times as possible.

In regards to a point of reference - the images themselves are very good reference objects by their nature.  They are quite large and easy to identify from the next row.  I think most people have decent enough tracking skills and scroll on enough websites to combat this.

Lastly, if someone was searching for images, they would scroll to the bottom of the page to see what was there.  When I read a forum thread, or a blog post, and it interests me, I make sure I have seen the whole content before I moving on.  The only reason, I feel, someone would ONLY view the content above the fold is if they arrived at a page and could determine at quick glance that it was not what they were looking.

Overload. I just keep on mindlessly scrolling, not noticing individual images, instead of concluding that I need to refine my search. Prefer the old way.

Yep I'm a fan - its not like you don't have the option of a different browsing method if you choose to browse normally.

I'm assuming this will also benefit people with big screens that will have a whole big page full of thumbs that automatically fill their screen.

I tend to browse with a macbook, so scrolling isn't a problem for me - with double finger scrolling and a fairly slow connection this seems to work very well.

Overload. Luckily I have my Flashblock on. I hate to get dizzy. It also sucks bandwidth. But if they like to play, it's fine. When I have to scout images for buyers, I prefer the normal view, since the thumbs are larger and I can find the previous pages back. It's simply not usable in real life, but if they like it, who cares.

The effect is cool, however I think it is confusing for someone browsing images to know what he has seen or not. Also when you click on an image and then back to the results, there is a delay for thumbnails to load - just because there are so many of them, I guess.  I found it very annoying if you are further down the page.

I think it was holgs who suggested that the clicked image would appear on another tab - that might be better.  Also maybe still giving a limit of images in one result page - 100 perhaps.

How does it perform in dial up?

You can reach the last page, if you want, by clicking it on the site. But it seems to me that it is nearly impossible to reach the images that are in the middle of the search results with the old system.
Mostly you can make jumps over about 5 pages. But would you do that several times?
I am curious if these images with number 1500 or higher show up quicker now on Dreamstime.
It's easy to scroll, scroll, scroll and then wait a moment until the images are loaded. You can quickly scroll up and down in your search results...
For what I've seen from it, it looks like a great idea...