It can be any image in your photo app, ones you have taken or added from your desktop. Also, it doesn’t have to be the full image, you can zoom in and use just a part of the picture.
I have a picture of my pup I took with my iPhone that included her on a big towel. What you see when you turn on my iPhone is just her Bichon smiling face.
You can not change the black background to the windows that have you application icons… I’m sure that feature is coming. For now it is just the screen that shows with the Time, Date and ‘Slide to Unlock’ when you first tap the Home button to wake your iPhone.
To use one of your pictures as your Wallpaper:
Tap the Photos application on your iPhone – the one with the Sunflower on it.
Select the ‘Camera roll’ option to see pictures you have taken or any of the other groups you may have created from images you loaded on via your desktop computer.
Find the image you want to use and tap it so it appears full screen.
Tap the icon in the lower left corner of the screen that looks like a box with an arrow coming out of it. If you do not have one, the system has hidden those so you can see the full image. Tap anywhere on the image to make the bar of button options along the bottom of the screen to appear or disappear.
Once you have tapped the lower left corner icon, choose the Wallpaper button.
You can use the image as you see it by selecting the Done button – or you can zoom in by the usual two finger expand method. If you zoom in, you can use one finger to move the image around so you will have just the part you want to appear then tap the ‘Done’ button.
Remember when your adjusting the image that there is the Time/Date along the top of the screen and the unlock slider along the bottom that will partially cover those parts of the screen.
Using any image will not impact the original of the image. The system is using a copy so if you zoom in, the image in your Photos area will remain unchanged.
There are sites that offer images that folks have created and are offering for your use, for free, as wallpapers. This requires knowing how to move an image from your computer to your iPhone – I will cover that process in another posting. The images they provide will generally have already been scaled to 320 x 480 like these examples: