Google Reader has finally added feed favicons support, something for which you had to use Greasemonkey up until now.
The option is not enabled by default but you can turn it on by going to Settings, on the "Preferecens" tab and checking the "Show favicons for subscriptions" option:
The option is not enabled by default but you can turn it on by going to Settings, on the "Preferecens" tab and checking the "Show favicons for subscriptions" option: