When you upload an image for a product, it will automatically re-size it to the correct size for your website, making a small, medium and large sized version.  You can upload images for your main products, and any product options if you have them.

Main Product Images
To upload a main product image, click on the  icon in the Details tab for your product

Product Option Image
Product option images are for if you have a red shoe, and a black shoe (for example).  Simply go into to the Options tab, find the correct option combination you would like to upload the image for, select edit, and then click the  icon.

You may also want to see our article about uploading multiple product images.