Download the following js file and add in your js folder.
jquery.js
scrolling.js
Now add this js in your page.xml
<action method="addJs"><script>jquery.js</script></action>
<action method="addJs"><script>scrolling.js</script></action>
go to app/design/frontend/default/[YOUR THEME]/template/catalog/product/list.phtml
add this script on top of your list page
<script type="text/javascript">
$(document).ready(function(){
$('img.lazy').jail({
effect : "fadeIn"
});
});
</script>
replace your image with following code in line near by 58.
<img class="lazy" data-src="<?php echo $this->helper('catalog/image')->init($_product, 'small_image')->resize(135); ?>" src="<?php echo $this->getSkinUrl();?>images/spacer.gif" alt="<?php echo $this->stripTags($this->getImageLabel($_product, 'small_image'), null, true) ?>" /></a>
"spacer.gif" is default image of magento in your theme.