Below you can find the sample code used in this video-tutorial. It should be placed in your copy of app/design/frontend/enterprise/template/catalog/category/view.phtml.

<?php
$_helper = $this->helper('catalog/output');
$_category = $this->getCurrentCategory();
$_imgHtml = '';
$_imgUrl = $_category->getImageUrl();

if (!$_imgUrl) {
    foreach (array_reverse($_category->getParentIds()) as $id) {
        if ($_imgUrl = Mage::getModel('catalog/category')->load($id)->getImageUrl()) {
            break;  
        }
    }
}

if ($_imgUrl) {
    $_imgHtml = '<img src="'.$_imgUrl.'" alt="'.$this->htmlEscape($_category->getName()).'" title="'.$this->htmlEscape($_category->getName()).'" class="category-image" />';
    $_imgHtml = $_helper->categoryAttribute($_category, $_imgHtml, 'image');
}
?>