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Hi Lucy, to add the image to your email, you will click the little picture button on the design screen, and once you're in that window you will move to the second tab where you can resize the image. I would suggest constraining proportions so that it doesn't get out of whack by resizing just one dimension.
Another thing I would reccomend is to make sure your image isn't a super large resolution, because if you only resize it via HTML (as shown above), it will still require the entire image to be loaded, even though it may look smaller. I would advise resizing it in a program like Photoshop (or any similar photo editor), and make the image the exact size you would like to use for the application you are using it for.
A nice web based Photoshop alternative is called Pixlr (http://apps.pixlr.com/editor/). This will allow you to resize the image to the dimensions you are wanting.
Kenny, great recommendation on Pixlr! With a Mac as my work machine, it's not preloaded with any photo editing software and Pixlr seems as good as any paid editor for core functionality. Much appreciated!