This plugin is to make excerpts have an image near. WordPress strip every tag in excerpts including images. There is a mechanism for thumbnails which still ask for some coding. This plugin is easier to use the new feature from WordPress 2.9 but works with previous versions too.
It will use any specific thumbnail you have indicated manually. It will provide automatically thumbnails for all the posts which have at least one image but no manually-indicated thumbnail.
Requires WordPress Version: 2.6 or higher