Link Images

Is there a way to be able to add images associated with links in 3.1.3? I know that I can add an Image Address in the Advanced settings area of the Link edit, BUT what I get is an ugly graphic that line breaks the Link Name. If I try to leave the link name blank to eliminate that, then WP automatically adds in the web address as the link name.

I’ve searched through plugins in hopes that there was an elegant little plugin that can spiffy up links, but haven’t found it.

Thanks for any suggestions!