Fetching an image from the net and inserting into the buffer

[Tom]

I tried this code which when evaluated should insert the
image fetched from the net at point, but it inserts a rectangle
instead:

(insert-image
 (with-current-buffer 
     (url-retrieve-synchronously
"http://upload.wikimedia.org/wikipedia/commons/thumb/4/47/PNG_transparency_demonstration_1.png/280px-PNG_transparency_demonstration_1.png";)
   (goto-char (point-min))
   (search-forward "\n\n") ;skip headers
   (create-image (buffer-substring (point) (point-max)) 'png)))

It's emacs 24.1.1 on windows. Image are supported. If I download
the image from the above URL to a file and use create-image on 
that file then it displays properly.

But why doesn't it work when I try to fetch it dynamically with
url retrieve?