This hook would be called with the uploaded file, a flag that tells about wether a thumbnail was created and the caption that was given for the upload. The ratio: plugins could hook into this one to get notified when images are uploaded and could feed that data into their databases. Otherwise they can only scan the wp-content directory but the caption is lost if the user isn't using cut-and-paste to transfer it. Would be quite handy for a plugin I am currently working on.
XMLRPC uploads via metaWeblogAPI can call the same hook but just provide an empty string for the caption (as there is no caption provided by the API call).