Apple released iPhoto 7.0.2 on Tuesday which improves .Mac Web Gallery integration, according to Apple.
"This update to iPhoto addresses issues associated with publishing to .Mac Web Gallery, rebuilding thumbnails, and editing books. It also addresses a number of other minor issues," Appleis support page said.
More information and an 8.8 MB download are on Appleis Support page. It is also in Mac OS Xis Software Update.