This seems to work just fine.
<html>
<head>
</head>
<body>
<a href="https://stackoverflow.com/questions/5232862/link.html">Some text <img src="img.jpg" /></a>
</body>
</html>
<script type="text/javascript" src="https://ajax.googleapis.com/ajax/libs/jquery/1.5.0/jquery.min.js"></script>
<script type="text/javascript">
$(function(){
var $link = $('a');
var $img = $link.find('img');
$link.html('New Text');
$link.append($img);
});
</script>