No, this is not fixed for me yet. With off-line mode turned on there is no album art. Where the album art should be there is only a grey box with a lighter inner circle with a musical note in the circle.
I have an iPhone 3gs with 8G.
I am runniing iOS 6.1.6 (the latest available for this version iPhone).
I have Spotify v1.1.02549.
Still hoping for an update to fix this problem. Thanks,