The code in question:

//autodetect size if necessary
	if((size == 0) && (screen == 0))
	{
		if (quietmode == 0)
			printf("\ngfx2snes: %s 'Auto-detecting size of image blocks...'", RED_ERROR);

		clr = image.buffer[0]; //get the border color
		for(i=1; i<width; i++)
			if(image.buffer[i]!=clr)
				break;

This error is kind of confusing (it threw me for a loop when I was trying to convert an image.) It sounds like the auto-detection of the image block size has failed, but gfx2snes hasn't really tried to auto-detect the size yet. That happens immediately afterwards, in the for loops that increment i and then answer i-1 is stored.

I think the error should instead say that the size wasn't specified, so gfx2snes is falling back on auto-detection.