I tried searching some, but, I admit I gave up kind of early, so maybe this has been noted before.
I recently got my daughter a nook color, and, I did the calibre epub->epub conversion, and all covers were working.
She just lost all of her covers, this evening. I went looking through the file structure, and, I was able to restore all of her covers just by making sure there was a matching file in the ".docthumbs" directory with the same name, with the extension embedded, and then .jpeg
So, for a book called "Cory Doctorow - Little Brother.epub", the file in ".docthumbs" needs to be called "Cory Doctorow - Little Brotherepub.jpeg" - no space between the book name and 'epub'.
All of the covers were already there, but none had the 'epub' suffix, and a couple of the names didn't match. I bulk-renamed to add 'epub' to all, and I fixed up the couple that were off, and when I disconnected the USB, all of the covers were back, without rebooting or anything.
I hope that helps someone out there. I didn't look forward to re-converting epub->epub a second time.
[she just told me she is responsible for the renaming. She thought those files were the names of the books, so she went and changed them all herself

and then complained to me about the missing covers. But now I've learned something, so, that was good]