Image uploads in WordPress are handled by the Media uploader.
You can insert an image in your content by clicking on the ‘Add Media’ button in post or page edit screen.
You can also directly upload images to ‘Media’ and use them later in a post or a page.
You will need to visit Media » Add New page to upload your image(s). Simply click on the select file buttons and then select the images from your computer that you want to upload.