Recently I have upgraded my WordPress to version 3.2.1 (latest) and suddenly my nivoslider halted on the first slide and also It was taking a lot of time to load. I browsed and searched for the answer but there was not a satisfactory one. So here is the fix !
Actually I think the problem was with WordPress 3.2.1 default Jquery and nivoslider compatibility. So I downgraded my Jquery to version 1.4 and it is working like a charm.
Paste the following code in your wordpress functions.php file:

function my_init_method() {
if (!is_admin()) {
wp_deregister_script( 'jquery' );
wp_register_script( 'jquery', 'http://ajax.googleapis.com/ajax/libs/jquery/1.4/jquery.min.js');
wp_enqueue_script( 'jquery' );
}
}

And also on some blog I got a little tweak that remove spaces or linkbreaks between nivoslider images div in html code like shown below.

<div id="slider" class="nivoSlider">
               <a href="http://www.coffeedesign.net"><img src="<?php bloginfo('template_directory'); ?>/imagefolder/image1.jpg" alt=""  /></a><a href="http://www.coffeedesign.net"><img src="<?php bloginfo('template_directory'); ?>/imagefolder/image2.jpg" alt=""  /></a><img src="<?php bloginfo('template_directory'); ?>/imagefolder/image3.jpg" alt=""  <img src="<?php bloginfo('template_directory'); ?>/imagefolder/image4.jpg" alt=""  />
            </div>

Soon I will be giving a tutorial on how to integrate NivoSlider in wordpress latest version. Hope this article will help you a lot.