The image assigned in your Admin area under the Site Logo field is used for the header logo.

You can type in the name of a media file you have previously uploaded, or you can upload a new image and it will save the logo in your media files.

It is recommended to use a .PNG or .JPG file for the logo.  A .PNG file will allow for any transparency in your logo to show up.

Logo Size: ~ 250 px x 100 px

Resolution: 72 px/inch - Save for Web