Personally I think you've already made the assumption that naked infant pictures are in some way embarrassing. To my mind, they're not. To most Europeans, they're not.
It seems I'm really struggling to say this sufficiently clearly: The difference between a photo of a naked 4 year-old and a clothed 4-year old to me is the clothes, that's it. I really don't care whether the kid has clothes on or not, it makes absolutely no difference to the photo, and the first comment that would come to mind would be something like "wasn't that Summer of '73" or "Hey look at the size of that sand-castle you were building", or something equally irrelevant to the clothing situation.
If someone wants to get all upset over the photos, then fine. It's a bit weird to make an issue out of it, but whatever. Similarly, if the parents don't want to take the photos down, that's also a bit weird, it seems like basic courtesy ought to rule here. As I said, I don't really care; I think it's a matter for the family to handle, and apparently they think it's a matter for the courts to handle. Fair enough. I don't really see why it's news, either.