Adding Latest News Widget? Please help

Hey,

I have been working on a wordpress test site here:

http://mgdesign.hostultra.com/WP_Experiment/

I have been searching for some time now to find a plugin that will automatically pull in posts from the latest news category.

I need this to have thumbnails as well. So far everything I have tried is only text based and not very editable.

Can anyone help me out here? Any help would be greatly appreciated.

Cheers