$ ./img2iso.sh
#: bad interpreter: No such file or directory

and

$ sh -x img2iso.sh
$

What is more strange:
$ cat img2iso.sh
done$ exists! Incrementing suffix"

I have triple checked that the directory does exist and is spelled correctly with proper case.

In the second case nothing happens but a prompt change. No echoes.

In the img2iso directory no files have changed extension after running the script.

The concatenate I can't even begin to understand. It seems very odd to prompt the last echo like that.

I will have to look this over carefully again and again as I'm sure your code is good. I just can't see what I'm missing on my side.

I'm on a MacOS X 10.4, perhaps this matters? I use Smultron as editor.