Google has finally updated their Custom Search Engine platform to offer image searching capabilities.
You just have to enable this option in the control panel of your custom search engine and image search would be enabled on your engine automatically.
The two options Web and Image appear as tabs at the top.
You also get the option to customize how the image search results would appear in the custom search engine.
Now you can add an image results tab to your CSE to offer your visitors image-only results in a variety of image-optimized presentation formats. Once you enable this feature, your CSE will have two tabs. The first has your current web search results and the second, Image tab, contains the image search results.