Dang... I'm having a few problems sorting this one out.... and running out of time. But here are a few things.
The image is 66 px high, catmenu is set to 45 px high so that will have to be changed.
IE is using a different style sheet than FF
Look for this in the source code:
<link rel="stylesheet" href="http://vegankingdom.co.uk/wp-content/themes/tuaug4/style.css" type="text/css" media="screen" />
<link rel="stylesheet" href="http://vegankingdom.co.uk/wp-content/themes/tuaug4/style-ie.css" type="text/css" media="screen" /><![endif]-->
So making changes in one style sheet may not fix it in the other.
Do you have FireFox Firebug plugin? It allows you to test different styles setting in real time, without have to reload the page each time. By playing with the page and setting the height to 85 and removing the top margin, all the image showed in FF... not perfect alignment with the menu but it was a start.
So you may want to get Firebug and test with that.
Also for IE there is the Internet Explorer Developers toolbar. It does the same thing in IE, allowing troubleshooting the realtime style changes:
I'm just out of time for the project right now.