I'm having the exact same problem. No new software, no new devices. I had been transfering photos from one computer to another. After about 3 disks the import program didn't automatically start when I selected "use Picasa to import pictures". I went to the program and tried to manually select import and the program locked up. Tried it several more times with the same results. Picasa becomes completely unresponsive to any input after selecting "import" including exit, or close.
Reinstalled Picasa with the same results.
Exact behavior is... select "import". program freezes, cursor becomes a hand Hard drive runs then stops. No thumbnails appear. cursor changes to Win7 "working circle"
Picasa is completely locked up at this point