Version 3.1.2 is still fine, but upgrading to 3.2.0 or 3.2.1 I see that icons are no more generated using "yarn dev" on Nuxt 2.14.6 with target "server". No warning or errors in output. Link to the icon is there but the file is non existent.

I have my icon.png in static folder and using default options for icon module. You will have to delete cache folder in node_modules to see that the icons are not generated starting from version 3.2.0.