Image-blocking (which is the default for many email providers, including Gmail, AOL and Outlook) prevents email recipients from seeing the images in the messages they’re receiving. While this can merely render images ineffective, they can cause bigger problems (if, for example, height and width attributes aren't specified, in which case the entire screen is filled by a big blank spot because the email client can't tell how large to make that image appear).

Many people do download images, or have figured out how to change the default settings so that they receive their email with the images unblocked automatically. For those people, it is a matter of how effective the image is in conveying the message you’re trying to convey, motivating the recipient to act, donate, click through, etc.

A 2006 study by M+R Strategic Services found that that including images did not seem to make messages more effective. But it also did not seem to make them less effective.  http://www.mrss.com/news/Do_Images_Help_Or_Hurt.pdf

Eve Fox, M+R Strategic Services http://www.mrss.com