Info only really because I am giving up on 3.2 - there are just too many issues - I'll wait for 3.5. something!
However it would be worth investigating the fact that I cannot reset the Category image size.

With reset do you mean when you upload another category image it is not updated with the new file?

I am not seeing K2 in the component list - i can only access K2 from the control panel in 3.2.

Through which version of Joomla! did you upgrade from to 3.2 and which K2 version did you use?