When you set up a new category there is an option to assign a category avatar with a full path to an image but on my test install the avatar is updated with every new upload instead of remaining the assigned image. I have thumbs enabled and entered the url correctly. The option asks for full path but if you enter a server path http://www.mydomain.com
is added to the front of it breaking the image link. Entering the url works correctly but only until the next image upload at which time it's replaced with the latest image added to the category.