Sure that my designer will disagree, but I don't like image based navigation. I would much rather spell out to search engines what they will find if they follow the link.
My favourite at the moment is simple CSS, with a bit of PHP/ASP/Whatever behind it to make it a bit smarter. Take a look at the left hand menu of www.findwatches.co.uk to see what I mean. This allows for unlimited nesting without the need for DHTML or Javascript. Smartening up the CSS could easily give something that looked as good as images.
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