Most people will have some kind of image editing software on their pc.

The most well known (and pretty expensive!) is Photoshop. This will do almost anything needed in web design.  Older versions of Dreamweaver bundled in the Studio package, would have included Fireworks. Free image editing software is available from Serif and Gimp.

It is usually best to use jpeg or gif or png files. Png files can be slower to load but enable you to use transparent layers. There can sometimes be problems displaying png files properly in IE6. Do not use bitmap (bmp) files as these are large files which will be slow to load.

It is possible to effectively resize an image from within your web editing software by resizing the layer or container that it is in. However, this will diminish the quality and/or distort the image. So you should alway edit the size of the image in your image editing software.