In /skin1/customer/main there are 2 files - subcategories_list.tpl and subcategories_t.tpl
The first one is the one you want to modify to include pics. Just look at the code in the second one of how the pic is inserted.
Code:
{if $subcategory.is_icon}
<a href="home.php?cat={$subcategory.categoryid}"><img src="{$subcategory.icon_url|amp}" alt="{$subcategory.category|escape}" width="{$subcategory.image_x}" height="{$subcategory.image_y}" /></a>