Android - Where is the background image saved?

I was annoyed by the exact same problem, so I have programmed an app that automatically saves your wallpapers and your live wallpapers too. It makes it easy to revert to a previous wallpaper. It is called Wallpaper Saver, by Appdictive, and it's free in the Play Store. (It does not require root access.)

I'm not sure if it's the same on older systems, but on ICS it appears to save directly to /data/data/com.android.settings/files/wallpaper. I set mine from the browser, pulled that file, then changed it to a .png extension and viola - it was the image I had set.

It also appears that this file simply gets overwritten when you change your wallpaper, so I don't see a way to recover one once it's changed unless you have a copy of the image somewhere else.

This also appears to be where it's saved on CyanogenMod 7, so it's possible that this is the "standard" location (certainly a good place to check, at least).

In Android 7.0, it's located in /data/system/users/0. You'll have to use a file explorer to rename it to a jpg or whatever it is. The folder also contains your lockscreen wallpaper so that's a plus.