After just setting up the backup service and running a snapshot, I tried to shrink an image (to make room for a dedicated dev image) and received the following error:

lv_resize: Image is currently snapshotted.

Furthermore, a quick df -h shows that the filesystem has been resized to the desired size, but on the dashboard it still shows the previous size. This means that the filesystem resize is successful but something is failing in the image resize. Any ideas?

As the message indicates something relating to the snapshot is affecting the resize job. You need to put in a support ticket so Linode is aware of this.

--
Travis

This occurs briefly after a backup runs. Wait a few minutes and it'll go away on its own.

-Chris