The Scrollarama plugin creates a loop of recent posts (up to 10) with images, within selected categories, and scrolls through them using jQuery effects you pick.
You can easily set your own images for each post in the slider, or leave it to automatically take the first attachment for each post. Height, width, transition type and transition speed can all be customised easily.
Want to see it in action? Check out I <3 Kittens, the test site.