Adding header image, where is image stored

Hi,

I want to know where my header image is stored? I have changed the image in the header code but don’t know where the image should be located in order for it to actually show up in the header. Here is the header code. where should images/gmad.jpg be?

<div id=”photo”>
<img src=”<?php bloginfo(‘stylesheet_directory’); ?>/images/gmad.jpg” alt=”family pic” />
<ul id=”nav”>

• /”>Home

<?php wp_list_pages(‘title_li=’); ?>

</div>
<div id=”content”>

Thanks
Debbus