Sounds like you're hitting the MacOS 10.8 bugs with ImageCapture.
(oops, CS3, so you don't have ImageCapture support anyway)
The TWAIN plug-in support has been dropped from recent versions of Photoshop.
Did you update to CS6 perhaps?
Also, make sure you have a fresh, updated, Lion-compatible scanner driver from Epson.
Anyway, scanning from the Import menu item inside Photoshop is a very inefficient way to scan. Photoshop does not do the scanning anyway, and you're just tying up the very expensive Photoshop application for no good reason whatsoever. The TWAIN Import menu item only calls on your scanner application to do the scanning for you but otherwise blocks you from using Photoshop simultaneously.
By all means scan outside of Photoshop, either with your scanner's stand-alone scanning application or a utility like VueScan or $ilverfa$t (Silverfast). VueScan even will put up a menu item under Import, but will let you use Photoshopon something else while you scan.
Scanning outside of Photoshop lets you continue working on other stuff while you scan.
TWAIN is still available as an optional plugin, but few 64 bit TWAIN drivers exist (Epson has none).
(it's optional because so many buggy scanner drivers kept causing Photoshop to crash)
Thanks for clarifying, Chris.
It's not clear to me what version of Photoshop the OP has, maybe he's still on CS3, as he says.
Also, he says he's on 10.7.5. Would the Image capture bug bite him there too?
No, the image Capture bug should only affect 10.8.
But CS3 doesn't even have Image Capture support.