For anybody who needs the icons inline, i have created the following code, you can add this in your template.php in your themes folder

function YOURTHEMENAME_menu_item_link($link) {
	if (empty($link['localized_options'])) {
    	$link['localized_options'] = array();
  		}
	// you could leave $link['menu_name'] == 'primary-links' out if you want all menu's to have inline icons
	if($link['menu_name'] == 'primary-links' and module_exists('menu_icons') and module_exists('imagecache')) { 
		if(isset($link['localized_options']['menu_icon'])) {
			if($link['localized_options']['menu_icon']['enable'] == '1') { 
				 if ($link['localized_options']['menu_icon']['path'] 
				 	&& file_exists($link['localized_options']['menu_icon']['path'])) {
						  $picture = '<div class="menu-icon">'.
						  theme('imagecache', $link['localized_options']['menu_icon']['imagecache_preset'], $link['localized_options']['menu_icon']['path'])
						  .'</div>';
						}
					}
				}
			}
	return $picture.l($link['title'], $link['href'], $link['localized_options']);
	
	}

I have not fully tested this code, but at my site its working fine.