i just finished a project storing images in the database and i know is possible.
you should be able to update the image in the database like any other columns. start out by uploading a very small text file (images show up as a bunch of gibberish when you're looking at the raw table contents) to the binary column, output whats there (from mysql client: SELECT * FROM table_name; ), upload another small text file and see if the contents actually changed in the database. if the didn't then its an issue with the sql update syntax, post some code that you're using so that we can look at it.
if the contents do change then your browser isn't loading the new image. this is a big problem that i had and to fix it toss in some gibberish in the url (like www.yoursite.com/php_page.php?image=yahoo&random_gibberish=124124123 ) and use some metatags to force the image to expire from the browsers cache.