Hi,
well I'm actually having the same issue, and I can't find the parameter to switch it off. Actually: I don't think there is a parameter for that, but if I'm wrong, please correct me.
What did I do: I run a working PG with 2.2.4 - I upgraded to 2.7.0, works except for above problem. Then 'updated' to 2.6.2 and then you'll get the 'no Images available message'.
I've got a link to a category in category view. In the top category there are only subcategories and next down the line you'll have categories with images.
I'd like to show the no images available message in 2.7.0 (I prefer to show nothing, but I can do this with the language string translation), instead of an empty image
Here the screenshots.
Phoca Gallery 2.6.2

Same page after upgrade to 2.7.0
Awaiting any reply,
Carolien
Please ask your support questions in the forums and not via PM - I delete those PM's
Backup before you do any major change to your website (and test first)