I am using Fedora 18 beta.

I think that it would be good to be able to specify a folder in which the Background tool should look into. For now, it only looks in the Pictures folder (not recursively).

Another bug report (https://bugzilla.gnome.org/show_bug.cgi?id=689351) already mentions that there is a regression concerning drag and drop, which would give the possibility to use an image wherever it is located. However, I think that even such a feature would not be enough.

Imho: 
1- the tool should look recursively in the specified folder (default being Pictures), as people may want to organize their images
2- users should be able:
  a) either to change the single folder in which the tool looks for images (keeping Pictures as the default one)
  b) or to specify a list of folders in which the tool should look into (the same way some music players allow to specify multiple locations to watch for the music library)