Code:
#navigation ul{
font-size: 0;
Looks like it could be your culprit.
And you are adding a link right?, eg:
Code:
<ul class="navigation">
<li class="nav-history"><a href="">LINK TEXT</a></li>
...
Once you remove the image it self, the jQuery will have nothing to target:
Code:
$('.nav-history img').attr('src', 'images/nav_01.gif');