google released a new version of google reader. it integrates the favicons in the sidebar:

4.bp.blogspot.com/_QriD2y6VZ-Y ...

Nice! Here's the official blog post: googlereader.blogspot.com/2009 ...

but it does not show up on my a/c!

It's still being rolled out to everyone...

I have it! You have to opt in in order to activate this feature.

I read my feeds using labels only, I rarely click (and see) individual feeds. So it's not really useful for me. And you?

Well I've enabled it. But usually I have the side bar hidden and use keyboard shortcuts to go through the whole list, stopping to read posts that look interesting.

I have it to and I like it I must say, but I usually use folders only so I don't see the favicons. I can imagine that if you have a lot of feeds it can be a mess.