Until very recently, Google didn't explicitly state whether or not you could put graphics adjacent to an AdSense block, though it's always been clear that you can't bring undue attention to the advertising. You can say "Advertisement" above the block, for example, but you aren't supposed to say "Sponsor" because it implies a relationship with the advertiser, and an implicit endorsement of your site by those advertisers, that just isn't true.

In terms of the adjacent images, I've seen these for a long time and have always disliked them because I do think that it's an attempt to trick the reader, who quite logically assumes that the photos or pictures are somehow from the advertiser.

Here's a pretty benign example of how you can have images adjacent to an AdSense block that I cobbled together:

In this example, the images are banal, but imagine if the ads were about automotive parts and the photos were of different exotic racecars (I've seen a site that did that) or were about celebrities and there were little celebrity photos adjacent to the adverts (seen that too).

The question is: is it acceptable to Google?

The answer is absolutely not.

As explained in the AdSense blog:

"We ask that publishers not line up images and ads in a way that suggests a relationship between the images and the ads. If your visitors believe that the images and the ads are directly associated, or that the advertiser is offering the exact item found in the neighboring image, they may click the ad expecting to find something that isn't actually being offered. That's not a good experience for users or advertisers."

There's an additional clarification that applies to some of my colleagues who have directories of Flash and other highly graphical content: "Publishers should also be careful to avoid similar implementations that people could find misleading. For instance, if your site contains a directory of Flash games, you should not format the ads to mimic the game descriptions."

I hope that clearly answers your question. But really, this is just common sense: if people can't differentiate between ads and content, then aren't you trying to trick them into clicking on the ads as if they're just part of your site navigation? And that being the case, surely you would agree that this is definitely not a service to the advertisers, who are not getting any sort of valid leads from their ad, just people who then complain that they didn't want to go there and click the BACK button before the page even finishes rendering.