The translation of "Vaffanculo" and the Sicilian gesture is loosely "fuck you," but more specifically the language suggests that the recipient of the gesture "take it up the ass."
The photographer released the photo for publication and was promptly fired from his ten-year position as a freelancer for The Pilot, a weekly Catholic newspaper.
The verbal response was apparently not heard by Sweet, only by Smith. Scalia's initial response was to say that he had not made an obscene gesture, and a spokesperson for the Judge released a letter saying that he explained the gesture to Sweet (which Sweet and Smith deny), describing a rather different gesture meaning "I couldn't care less."
(Via Donna Woodka's "Changing Places" blog.)