your code is written to handle the global var img.
When you load a new image, a new local img var is created, which you only draw on the context.
What you need is to have the new image replace the old one.
So just change, in your file loader :
function handleImage(e) {
var reader = new FileReader();
reader.onload = function (event) {
img = new Image(); // not 'var img=...'
img.onload = function () {
draw(true,true); // just update your app
}
img.src = event.target.result;
}
reader.readAsDataURL(e.target.files[0]);
}
it workd, as you can see here :
http://jsfiddle.net/LAS8L/108/