Generally, it's easiest to use the wallpaper settings in the desktop environment/window manager, as John VV mentioned.
My two favorites for editing images are the GIMP and KolourPaint.
I generally use the GIMP, because I've gotten pretty good editing images with it, but it has so many features it can be confusing at first. My favorite GIMP tutorials are at http://blog.meetthegimp.org/
. Watch the first three episodes and your friends will think you are an expert.