gulpfile.js

var gulp = require('gulp'),
    gutil = require('gulp-util'),
    sass = require('gulp-sass'),
    imagemin = require('gulp-imagemin');

var paths = {
  css: 'css/style.css',
  img: 'img/**/*''
};

gulp.task('css', function () {
  gulp.src(paths.css)
    .pipe(sass({outputStyle: "compressed"}))
    .pipe(gulp.dest('/'));
});

gulp.task('img', function() {
  gulp.src(paths.img)
    .pipe(imagemin())
    .pipe(gulp.dest('img/'))
});

gulp.task('watch', function () {
  gulp.watch(paths.css, ['css']);
  gulp.watch(path.img, ['img']);
});

gulp.task('default', ['css', 'img', 'watch']);

Just looking at this now and thought I'd let you know - duplicate apostrophe on line 8

Also Line 25 should be gulp.watch(paths.img, ['img']);