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I have set up Cloudfront on my site to serve static files only. This results in the image file's URL to change from: mysite.com/image.jpg to uniqueid.cloudfront.net/image.jpg

Will this affect how images are indexed by Google? We are currently ranking quite well prior to this - would hate to see these go! Any problems with duplicate content?

Also, would using a CName (to make the URL appear nicer) impact my rankings / SEO?

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This depends on if your images are benefiting your ranking currently, or not. If you're employing good SEO practices like using Alt text with keywords that match your surrounding content, then yes it could. Here's some information on that: Optimizing Images for Google

Using a CName is a good idea to not affect your rankings, if as pointed out earlier you're benefiting from them. Here's a link discussing this approach: Hosting Images on your Domain or Flickr for Best Traffic Potential

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