Song artwork does not appear on album

I had the exact same problem several times in the last three years (with an iPhone 3G, an iPhone 4 & an iPod touch).

I always solved it this way :

1. disable music syncing for the device (uncheck everything in the "music" tab)
2. sync the device at least two times
3. enable music syncing
4. sync again

I usually divide steps 3 & 4 in smaller steps. I begin by syncing a few artists to check everything is fine before syncing all the music I want on my device.

I hope this will work for you.

figured it out, it could be that i did this in the old itunes and because it was years ago i forgot and that updating itunes reset every setting

anyway, here are the steps i followed

1. click on the icon in the top left hand corner and select show menu bar (or Ctrl + B)
2. click on View > Show View Options (or Ctrl + J (you may be able to skip step 1 but i didn't use shortcuts))
3. Make sure Sort By is set to Album
4. Click in the checkbox beside Show Artwork
5. make sure that under the Music Section that the checkbox beside Album is checked, if it is not the albums will not be sorted alphabetically like they really should, while you can sort by what ever way want sorting by name will split albums and you'll only see the groups if 2 or more in the list have belong to the same album (ie. Check Mate and Cheese from Code Geass Lelouch of the Rebellion R2 - OST 2 will appear grouped and before Chemical Magical Cooking from Dream Eater Merry Character Songs - Kounagi Yui but separated from Guren which belong to the same sountrack)

Optional Parts (stuff i did because i like it)

1. Check in the checkbox beside Always Show - unless the size of the list of songs in an album group is greater than or equal to the height of the artwork it wont show, i would say 7 songs cause alot of Opening Soundtracks i have have only 4 tracks, with Always Show checked the list of songs in an album has 3 spots left
2. Set the Artwork Size slider to max (may have an affect to what i have explained above)

EDIT: these steps also work up to 12.0.1.26. Though when I installed it the default view for music was Albums. When you do step 2 make sure the view is set the view to Songs otherwise the options from Step 3 onward will not appear