- Images! Large Images. At least as wide as the space where you want to show them is. Bigger is better :)
- your images need to have an extension like JPG or jpg.
- Joomla 2.5 (>2.5.11) or Joomla 3.2 (should work with Joomla 3.1.5 too) 
- PHP 5.3 or later
- server upload limit > 3.5MB
- MySQL (prefered) or PostgreSQL (build in but unsupported)
- GD library for PHP
- set the PHP memory limit high enough
- your Joomla Template should put jQuery into no conflict mode
- standard Joomla Mootools have to be available.
- your template should not produce any JavaScript errors before you install the component

While Joomla 2.5 is still supported I recommend to use this component with Joomla 3.x. For the front end this is nearly no issue but the back end just looks better with Joomla 3.x and offers some additional features.