Is it still crashing for you though, even though it doesn't display the cover art?
No, it doesn't crash. Just a spinning disk when it's selected. Selecting and deselecting the option will switch between a spinning disc (on) and a normal peek image (off) while something is playing. Conversely, switching the setting before or after play or before or after restarting the program has no impact on the behaviour. In other words, it seems like it can't find the cover, not that anything else is wrong.
Would the cover art location make any difference? Mine are saved in the same folder as the file, and embedded.
I'm testing this, BTW, with the just posted 0.8.1 version. I haven't yet noticed in differences. I did, however, just try changing MC versions (to the previous one, then back to the current), and my settings (cover off, track name on) were retained. Although I wasn't paying attention, I'm pretty sure the last update (with version 0.8.0 installed) a few hours ago resulted in the settings changing. Did you change something in 0.8.1 that might affect this?