In your preamble write
Graphicx will probably look for the picture in whichever directory the .tex file is in, but it's best to specify the graphicspath - especially if your picture is somewhere else on the system, in which case it won't find it, so write underneath that (yes, two braces, it works better, apparently):
Then, wherever you want the picture:
It should not be necessary to include the extension. You can also scale the picture using
Give x as a decimal, e.g. 0.5 or 1.8.
You can also use the figure environment if you want captions. There is a lot of information about this in the LaTeX manual (http://en.wikibooks.org/wiki/LaTeX). There are also dedicated forums for LaTeX queries, and - indeed - TeX queries in general, and I suggest that for general TeX questions you go there. Not that I'm not completely happy to help, but you're much more likely to find your answer. Also, please remember that this won't work for .gif, I don't think. You should be using .jpg, .png or .pdf.