In sort No. The optimized serving of single images ( E.G.a large .img file) as image services only requires ArcGIS server. When served as an image service the image is quickly accessible as a web service directly in ArcGIS applications, but also via SOAP, REST & KML Image Service include a number additional functionality. For example the the client application can define the compression for transmission enabling faster access even over low band width networks. At V10 image services also work on Raster LYRs that include processing and the client application can define processes to be applied. For example a single elevation raster can be served as elevation, hillshade, slope and aspect.
Alternatively to using image services the image can be included in an MXD document and then cached. These map cache tiles can then also be served as a static background with near negligible load on the server. Map cache provides the highest scalability and recommended if you have a static base image that you wish to server to large numbers of web applications.
The ArcGIS Server Image Extension is recommended when serving large collections of imagery, whether these are many tiles of orthoimagery possibly in different formats and projections, or lower level imagery from satellites or aerial sensors.
As a bit of background: Image Server is a technology in which the server performs dynamic mosaicking and on-the-fly processing of imagery. It used to exist as a separate stand alone server product at v9.2. At v9.3 image services were added as a core capability of ArcGIS Server to enable the optimized serving of imagery over the web. Using image services any image or raster could be served as an image service. A single image could be server as an image service. The ArcGIS Server Image Extension extended ArcGIS server and provided the capability to serve large collections of images defined in an Image Service Definition (ISDef). ArcGIS Server passed requests that required dynamic mosaicking and on-the-fly processing to the separate image server. At V10 the image server technology was fully integrated into ArcGIS (both desktop and server) and the ISDefs were replaced by Mosaic Datasets stored in the geodatabase. The Mosaic Datasets are the optimum data model for image data management. They define a catalog of images, associate metadata and parameters for transforming the imagery into different image products. They can be created using ArcGIS Desktop (Editor or Info) and used directly by any ArcGIS application with the required processing being performed by the client application. The ArcGIS Server Image Extension is required to server Mosaic Datasets as image services. When served as image services, Mosaic Datasets are accessible as large virtual image with all required processing applied on-the-fly by ArcGIS server. They are also accessible as catalogs that enable search and discover of imagery.
