Category images

I have a client who recently said that they would love to have their navbar (which displays categories now) have a neat looking rollover look or just be a graphic rather than simple text.

I can obviously create these using any CS4 tool in my arsenal and then hard code them into the navbar using the source category with specific ID# but I was wondering if it would be possible for wordpress to add an “image” function like the links currently have that allows us to assign a category with a specific image that could be used in places like the navbar or even sidebar if you wanted to have category buttons on the sidebar.

Maybe even a rollover state option with normal, hover and press… okay that might be going too far.