I have finally got this working (I have thousands of .eps file from six calculus textbooks that we have written), but it was a drawn-out pain, because not being a techie, I didn't understand the Ghostscript bit. For any others who may be struggling:
- GhostScript needs to be installed.
- There are links to the versions of GhostScript that are required at https://code.google.com/p/sagethumbs
- Sometimes the first hover on an .eps file produces a text preview, but moving away and moving back fixes it.