I've always been a bigger fan of artwork on covers than of designed covers. That said, I like the core book covers, but I think that the "faux book" cover idea has been taken too far by some publishers. When the first few d20 books came out that had covers similar to the WotC books (Creature Collection, Relics & Rituals) I thought they were cool, but it now seems that there are far too many of them on the shelf at my FLGS. WotC does a great job with their covers, as has been mentioned before, they are actual pieces of art that have been photographed. I met Henry Higgenbothom at GenCon last year and got to look at several of the original pieces, they are amazing. The covers that are designed in Photoshop usually end up looking liek a poor reproduction of what an old tome is supposed to look like. There have been a few that were well done, but for the most part, what I see is a retred of an idea that has been done better. The books that come out with artwork on the cover are the books that draw my attention when sitting on the shelf. That's not to say that I don't buy books with designed covers, I rarely buy a book strictly for the artwork, although good art and covers make me feel better about a book purchase, especially if it's an expensive book.
I loved the Dragon and Dungeon covers prior to 3.0. I still have the first Dragon Magazine I ever bought (#89, I think). It has a wizard casting Mordenkein's Sword in a dark room. Great cover, full of action, and it sticks with me. There are many other covers that stick in my mind over the years as well-Trouble At Grogs from one of the early issues of Dungeon, the Witch kneeling on an alter from a Dragon in the early 100's, the chess covers, and many more. Since 3.0, none stick out as anything special, but I can certainly think of a few that I thought were awful.
As far as the arguement that covers sell books, I have to agree wholeheartedly with it. I saw it while working for several years in a variety of bookstores, and I sat in on many, many cover meetings when I worked at HarperCollins. A bad book with a good cover will outsell a good book with a bad cover almost anyday. Face a book out on the shelf and it will almost always outsell the book sitting next to it. Publishers sometimes PAY to have their books faced out on the shelf. As for good books with bad covers not selling, look at the heavily designed covers that White Wolf was putting on their fiction line in the mid-late 1990s. Good books-Fritz Lieber, Michael Moorcock, and other authors who should have steady backlist titles. Cutting edge design, but awful looking books. You could sometimes hardly tell what the title was. Poor design choice, and the books sold terribly.