Initially after upgrading the app from 1.6 to 1.7 the album art still did not show when offline. However, I completely uninstalled the Spotify app and re-booted my iPhone. Then I re-installed the Spotify app and marked the playlists I wanted off-line. Then I waited for Spotify to download all the these off-line playlists (snooze). After all that, I went off-line and the album art showed as it should. Thanks for FINALLY getting this fixed.
unfortunately the process of uninstalling, rebooting and reinstalling the spotify app did not solve my problem with the disappearing cover arts when turning into offline mode or simply not having internet... any other methods to fix that really annoying bug?
just so you know: iphone 5c, latest ios 8.0.2 and spotify version 22.214.171.1244
i just test this pretty thoroughly... iphone 5s, ios 8.1, spotify app126.96.36.19944 - no matter what I do, or where I mark a song for offline use, if I play the song after (offline or online), the album art does not show up in the expanded view of the song playing. It does show up on the small view as you are looking at the queue or other places where there is small album art.
I marked songs for offline use from songs, albums and artist - no album art. I deleted the app, reloaded, signed in and then marked a playlist... didn't matter - very consistently does not show album artwork if a song is marked for offline use. As soon as I take the song off offline use, restart the app then play the song online, the artwork is there.