I recently worked on a project where the main menu items were to be displayed as images. Of course, stylish menu items are usually displayed using text that's been styled with Cufón (or a similar solution) and using CSS sprites for the background. But in this case, there wasn't text.
Now, I could have worked on updating the Imagemenu module to work with Drupal 7, but there just wasn't enough time in the budget. So instead, I decided to use a hook in template.php to get the job done for me.