In the documentation here: http://blogs.msdn.com/deliant/archive/2008/12/02/managing-chart-generated-images-with-chart-image-handler.aspx on the ASP.NET Chart Controls, it states:

Do not use this [the memory storage] option in a server cluster or a multiple-process site.

Well, if you have multiple instances of your web role in Windows Azure, this is gonna get you.  It got me. But hats off to the Windows Azure for actually simulating multiple instance in my development fabric -- didn't realize they did that.