Update: 3.4.5 wasn’t compatible with WP 2.8 and older (no check whether the new post thumbnails function is available). The first 4 downloads had this issue.
This is fixed in the download below – which is now version 126.96.36.199.
With Post Thumbnails, a new feature of WordPress 2.9, plus a fix for a drop down menu issue in IE 8.
Please ask questions at the BFA WordPress Forum
For a preview see http://wordpress.org/extend/themes/atahualpa