This is a problem on iOS6 which will be fixed in the next Foliobook update. 

On iOS6  the user can prevent apps from accessing images as a part of a new privacy policy.   When the user first attempts to access the photolibrary with Foliobook they will be asked if they want to give Foliobook permission to access it.

If the user denies access at this point,  Foliobook will exit whenever the user tries to add photos from the iPad photolibrary. Adding images from Dropbox continues to work normally.

This is easily fixed by altering the privacy settings for Foliobook so that it has permission to access the pictures.

To fix the privacy settings,  open the iPad settings app, find 'Privacy' on the left side and select Photos on the right to find Foliobook, then permit Foliobook access.