I don't particularly understand why an image would work in a span, but not by itself.
See complete example here.
JS
$(document).ready(
function ()
{
$('#banner').hover( function(event){ $(this).children().hide("slow");}
, function(event){ $(this).children().show("slow");}
);
}
);
HTML
<div id="banner">
<span><img src="http://static.jquery.com/files/rocker/images/logo_jquery_215x53.gif" title="Image" alt="Image"/></span>
</div>
vs
<div id="banner">
<img src="http://static.jquery.com/files/rocker/images/logo_jquery_215x53.gif" title="Image" alt="Image"/>
</div>