You can pinch and zoom, but its tricky.
I'm not sure the exact mechanism yet, but either you have to wait for the image to fully load (might be looking at a cached thumbnail for a few seconds?) before you can zoom, in which case a loading/spinning wheel would be helpful to let you know you can't zoom yet, or you just have to do it really fast as the image closes if you don't touch and pinch immediately.
I'm not sure which it is, but I can definitely zoom on images if I try hard enough.
I would love to see a double tap to zoom as well, sync for reddit had that where you double tap to zoom and you can do it a second time for another zoom before it maxed out.