This is one of the magento most client required feature.
We can do it by many ways.After wasting my couple of days I found out one of easier and optimized way.
No need to add any extra attribute label or color or take care about images its work like charm.Code is fully dynamic.
It displays the image of that associated product is selected by us from drop down.
Show dynamic associated product images while selecting configurable option(color-switcher)