Image on classifieds and not fitting in the area

Sorry to have to post yet another question! I wish I could work these things out myself but I can't find any documentation which covers everything in depth...

Looking at the page Link removed at members request how do I change the image at the top? I don't want that image of a dog there, it just seemed to appear when the first classified post was made! I'd like to replace it with a classifieds category menu. How can I do this?

Also, why do the classifieds themselves not stretch to fit the area available in the centre?