z1chess, that's interesting, did you ever manage to resolve the issue? It definitely sounds like a server issue to me. The first thing I would do after a factory reset would be to try and re-download the books again to the Kindle and if the cover doesn't appear there, try the Kindle app on a PC and see if it appears there. If it does that would most likely suggest it's something to do with your Kindle and not the server.
If the same thing happens there too then it's a server issue and only Amazon can fix it.
The other option you could do would be to load Calibre and de-DRM on your PC, there's links here in the forum, connect your Kindle to your PC, enter the serial number in the de-DRM plugin and then drag a couple of books in and see if the cover appears there. If it does then the cover image is in the ebook and that again would suggest it's more of a problem in your Kindle not reading the cover. You could convert it to a MOBI extension (removing DRM) and re-apply the cover manually and see if that fixes it but you would lose things like sync to cloud, annotations etc, but that would be a possible way of getting them back.
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