It is well known that Diana is deceased. So I don't really see it as an ethic question, any more than an image of dinosaur. (Not that I am saying she is one.). However, I do not see the point in a "news" magazine. People, or any other lifestyle mag, yes. Newsweek, no.
PS: what do you have against SI? The annual bathing suit issue is one of the finest sporting traditions ever! ;-)