You can update the cover of an ePub file in iTunes. Just select the book and open the inspector (command-I). Then, click on the artwork tab and update the image by dragging in whatever artwork you've found or created elsewhere. Then, when you do the sync ,the book cover will appear.
Now, however, if you have already sync'd the ePub and are trying to change the cover afterwards, you may be in for some trouble. In the bookcase view in iBooks, the cover artwork is cached and will only show the original artwork when the book was first transferred.
This is a bug that has already been filed with Apple. Hopefully the next release of iBooks or iPhone OS will fix it. Not sure where the blame lies...