my comments are at the bottom of the slice that Martin linked above. I'm using (perhaps a variant of) the code on www.elizabethscanvas.org. i don't know of a good way to package it with web2py, but feel free to try the slice and let me know where it is broken.
for starmakerstudios.com i need to integrate that blob upload for profile pictures, so i'll be in that code again in the next week or two, let's get it cleaned up and shared!! Anand, if we get this working for you feel free to just contribute your cash to web2py. ;) christian