OK, it turns out iPhoto albums are showing up - there are just so many of them (one for each import) it's confusing but this is down to Apple not Twonky.
Also it is possible to get your iTunes playlists showing up - but you have to manually edit the config file at ~/Library/Application Support/twonkymedia-server.ini
Open this file with a text editor and change the line:
# full path to the iTunes library .xml file
ituneslib=/Users/USERNAME/Music/iTunes/iTunes Music Library.xml
Change the USERNAME to your own. Restart Twonky and you should find your playlists.
This really should be an option in the configuration pane - maybe in the next release (please)?