The new feature in version 1.7 is a button in the Upload/Insert Image box that inserts the image directly in the CFI box. Without it, you would have to insert the image into the post and then manually insert the bits of data into each field.
I haven’t tested it on versions of WordPress older than 2.7. If you don’t plan to use it, you can disable it in the settings page. This means a slightly faster Write panel because the javascript file that creates the button is not loaded.
PHP5 is required.