penders - 9:08 am on Dec 19, 2011 (gmt 0)

Basically the space you are seeing below the image has nothing to do with table spacing/padding (since you have already removed those), but because images are inline elements by default. Inline elements sit on the baseline of the surrounding (imaginary) text. The gap below the baseline is the space allowed for the descenders of the "g", "j", etc. By changing the img elements to display:block, they no longer sit on the baseline and the space goes away.

...and as birdbrain says :)