Try this plugin out:
http://www.viper007bond.com/wordpress-plugins/weathericon/
works really nice and does everything you want. I recommend using the beta 3 version. It works really nice.
This is a bug in version 2.0.3 and will be fixed in the upcoming 2.0.4.
For now you can download the following plugin:
http://www.txfx.net/code/wordpress/wordpress-203-tuneup/
Which fixes a few other bugs as well.
Here is a link to the shopping cart:
http://www.instinct.co.nz/?p=16
