It’s needed by pretty much everyone, and hence really a “core” feature.
WP already has some image processing built in that BP could/should leverage. As a member of a social network, I should be able to create my own albums, add photos and videos to them and tag friends and places. That much is really core. (including automatic resizing and lossless compression, and post upload of photos/videos to activity stream)
If BuddyPress Media is good, perhaps it can be merged back into BP core?
Further functionality, such as watermarking, CDN support, user notifications, comments, are probably plugin territory.
