When I first heard about this Jizo I also wanted to know its legend and so I learned an old and quite funny story dating from the Edo period:
Ōoka Tadasuke was a magistrate (machi-bugyō) of Edo during the shogun Tokugawa Yoshimune. This was a very important position, being at the time the chief of police, judge and jury, and he was known as a very just man, with a great ability to solve unusual cases.
One day, someone stole some kimono cloth from a traveling kimono salesman. Since nobody had any clue about who the thief may have been, the magistrate decided that Jizo, the protector of travelers, was... guilty of neglecting his duties!
So he ordered that the Jizo from a nearby temple should be... arrested, tied with ropes and brought to the court for trial. Hearing about this decision, people rushed in the courtroom, laughing. So Ōoka punished all the spectators, for their lack of respect, with a fine consisting of a roll of cloth.
Then, when everybody paid the fine, the kimono salesman was able to identify a stolen cloth and so the thief was arrested.
Of course, the Jizo was released, but since then people believe that this Jizo will grant a wish (for health or protection) when you tie a rope around him...
And today, the Shibarare Jizo looks like this:
EXIF info:
Nikon D90
Lens: VR 18-55mm F/3.5-5.6G
Focal Length: 20mm
Aperture: F/5.6
Shutter Speed: 1/1000s
ISO Sensitivity: ISO 200