Like Shenron, I've been using this technique for close to a year now and my images traffic has actually increased during that time. Not sure what happened for you there, but you may want to try it again and leave it for a longer period to see if:
a) The dip in traffic happens again, and
b) if the dip happens, then leave it to see if it comes back up again after a few days.
Also, the code you're using to break the frame above has the unwanted effect of preventing users from being able to click the "back" button and return to their search results on G Images. I got a lot of angry emails from visitors to my site when I was using that code. Instead you should use the below code which also breaks the frames, but allows users to click "back" without any problems:
if (top.location != self.location)