I’d put the image in the actuall post content.
If you’re using the_content() in your categorie-file then remember to put it after the <!–more–>.
Then use a function on your category-template-file to extract that first image and display it in the div you have going.
For the function see here: http://www.wprecipes.com/how-to-get-the … display-it
Put that function in functinons.php of your theme, and call it in your category-file.
Code: