Well, just create another li in between and put your image there
<ul id="navigation">
<li><a href="index.html"><img src="http://s17.postimg.org/c4vy50xtn/home_button2.gif" /></a>
</li>
<li><a href="about.html"><img src="http://s17.postimg.org/e6wfj9vsr/about_button1.gif" /></a>
</li>
<li>
<div id="logo" style="padding:16px">
<img src="http://s17.postimg.org/lf828k8jj/logo.png" />
</div>
</li>
<li><a href="portfolio.html"><img src="http://s17.postimg.org/7hpw39agr/gallery_button1.gif" /></a>
</li>
<li><a href="contact.html"><img src="http://s17.postimg.org/pn2uhb9yz/contact_button1.gif" /></a>
</li>
</ul>