JPEG and GIF image files are supported, photos will usually be JPEG. Don't forget to shrink the image to web resolution before uploading - I tend to resize mine to 320x240 or 640x480 pixels, or thereabouts.
Using the 'Attach' button on the preview page for a posting, you can browse to find a file on your local machine and then upload it.
Choose the appropriate file format from the drop down menu on the attachment upload form, and enter a brief description of the file, then hit 'Upload'.
Once it's uploaded, use the 'Return to display of content' link to get back to the preview page, where you can hit the 'Attach' button again if you want to upload a second file. Repeat as necessary.