I want to take a picture and make it my background image. How does the OS handle this when going from portait to landscape?

Would I need two different pictures (one landscape, one portrait), or does landscape mode just stretch the image?

you have to use an image that is bigger then 320 on both sides in order for it to work right. if you use and image that is just 240x320 or 320x240, then you get white bar on the sides or on the top or bottom. for ease of use, i just use wallpapers that are 640x480.