Also I want to make it clear - the saved images are not showing up in Android's Gallery, under Camera or any other folder. I've also done a file manager search for the images and cannot find them. I'm starting to think this does not actually save any images when I choose the save to local camera roll option.
Normally the images exported to the Camera roll should be in the /sdcard/Pictures folder under the folder Adobe® Photoshop® Touch
You should normally have no problem seing this in the Gallery application. You should also be able to see them from PS Touch when creating or importing from Local Photos and looking in Adobe® Photoshop® Touch folder.
There is a problem with PS Touch mentioned in this thread (http://forums.adobe.com/message/4219812#4219812) where you need to clear some corrupted data from Media Storage to be able to see the images. Please try it out to see if it helps.
For improvements please add an idea for this here: http://forums.adobe.com/community/creative_cloud_touch_apps/adobe_photoshop_touch?view=ide a so that we and other users can follow up on it.
I think I'm narrowing down the problem. On the Transformer Prime TF201, the "Pictures" folder is a system folder, and I cannot rename it, cannot delete files in it, or copy and past files into it via Astro or the Asus File manager. So obviously, Photoshop Touch cannot do this either. Because of this, it appears Photoshop Touch is effectively useless to me, unless I can save files in another location. I have not been able to change the status of the /mnt/sdcard/Pictures folder at all.
I'd really like to see an option in Photoshop Touch to set your directory where you want to save images. It's very frustrating as it stands right now. I've been experimenting with the program for part of last evening, but not being able to save the images (they won't even email) outside of Photoshop Touch makes it pretty useless.
This is obviously an Asus / Transformer Prime / Ice Cream Sandwich problem, but it is also Photoshop Touch's issue because PS Touch is very limited in the save file arena.
EDIT: I had the exact same problem with the TF201's Music folder after I did the ICS upgrade (couldn't write to the folder, couldn't delete the folder or its contents), but I fixed it by renaming the folder (which I could do) to Music2 and created a new folder called Music.
Just tried this with the TF201 Pictures folder. Renamed it Pictures2, then created a new folder called Pictures. And now the files save.
So. The problem is Asus' build of ICS and how it ugpraded. A Full Factory Reset will apparently fix this, but I have a lot of time invested into setting up my Prime and won't do a full wipe and reset for one App's issues, even if it is a $10 app. But... it raises a few more concerns with the Photoshop Touch app
a) it really, really needs a beefed up file save system. Not only should we be able to choose where to save, but also the size and even jpg quality settings. I'd also like additional options on top of jpeg and png - TIF, PSD come to mind.
b) I'm concerned there were no warnings in PS Touch that it couldn't write the file to the TF201's internal storage.