The code you were using is switching the image source, so when your mouse cursor left the smaller thumbnails the source of your main image had been changed and had no default to return to.
By using the 'mouseleave' function I've added the source of your default image which achieves the effect you wanted.
So 'mouseenter' replaces the image source, 'mouseleave' returns it back.
Take a look: http://jsfiddle.net/WolfHook/Xm2Be/672/
<script>
$('.small img').mouseenter(function(){
$('.large img').attr('src',$(this).attr('src'));
}).mouseleave(function(){
$('.large img').attr('src','http://placehold.it/300x300/');
});
</script>