To insert an image select either Insert then Insert Image Frame from the drop down menu or press the Insert Image Frame button. Click and drag to create a frame for the image to fit in. You will then be prompted to select an image. To insert the image double click the frame that you just created or select the frame and press ctrl-d. You will be prompted with a dialog box to locate the image that you want to select.
Scribus will select a wide variety of image types. The main types used are TIF which is know for its quality, PSD from Adobe Photoshop, JPG very common format, bmp and more. It will even let you insert a PDF an image.
Some of the settings that I have found helpful is the scale to frame option and the free-scaling option. These allow you to be able to either automatically adjust the size of the image according to the size of the frame are manipulate it manually. If you use the frame to crop the image then you have to use the free scaling option.