I have a very text heavy web site but decided some months ago to use ads which allow both text and image ads-- while all the ads that appear are highly relevant to the site's subject, no image ads ever show up. In that case- does using the code that specifies text only still produce higher conversion rates, as implied in other posts on this subject. . .or doesn't it matter?
It doesn't matter, whichever ads that are most relevant to your site will appear, in your case, they're mainly text only ads.
it will not be a problem but before you use images near the ads i suggest you to read the official answer from adsense team on http://adsense.blogspot.com/2006/12/ad-and-image-placement-policy.html
Yes, but the question is not what will show up-- I know what shows up-- but whether the advertisers bidding on that space pay the same whether its marked text/image or text only -- ditto for the conversion rate