The easiest way of setting your own picture as a desktop wallpaper is to click and drag the image to the desktop using the middle mouse button (if the image is already on the desktop then click and drag it a few inches to the left/right). On most modern mice, the middle mouse button is the scroll-wheel, which also doubles as a third mouse button.
On the menu that appears when you release the button, click Set as Background.
If that sounds a little too unorthodox for you (it can be hard to use the middle mouse button), you can also use Synaptic to install the nautilus-wallpaper package, which adds a simple Set as Wallpaper option to the menu that appears when you right-click an image file. After installation you'll need to log out and then in again before the option becomes visible.
For more wallpaper-related enhancements to Ubuntu, see Tip 139, on page 180; Tip 144, on page 187; Tip 199, on page 237; Tip 237, on page 279; and Tip 290, on page 338.
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