Take a look in the template_layout1.css that is used by that Masterpage and you
will find the following two entries.
#GlobalTitleAreaImage {
float:left;
background:transparent url("../images/lay1_people.jpg") no-repeat;
width:96px;
height:90px;
text-align:left;
position:relative;
right:5px;
}
#GlobalTitleAreaImage img {
float:left;
display:none;
}
The output of the SharePoint:SiteImageLogo control is an IMG html tag. Since
the style class for the surrounding DIV tag is GlobalTitleAreaImage the IMG tag
doesn't display. Instead the Background image lay1_people.jpg displays. To make
it work for your site again you would need to override the two CSS classes above
and remove the Background:... line from the first and the display:none; line
from the second.
Here's a comment from a SharePoint project team BLOG article that explains why
most of the master pages other than the original default.master don't use the
SiteImageLogo.
While there is an out of the box method for adding a logo (Site Settings >
Title, Description and Icon), doing this does not automatically carry the logo
down to new sub-sites as they are created; instead, you would need to re-specify
the logo on each site. This is by design just in case you want to specify a
different logo on the subsites, which normally makes perfect sense...
Based on that comment it appears that Microsoft has started hard coding the
image in more recently released Masterpages.