display latest post with image on homepage

Provided you’ve enabled Post Thumbnails in functions.php, the_post_thumbnail() should do the trick.

This is from a modified twenty eleven child theme, content-excerpt.php.

Have a look at the entry-summary section, I add a div and a right margin for a better look!

<div class="entry-summary">
  <?php if( has_post_thumbnail()) : ?>
    <div class="alignleft" style="margin-right: 1em;">
      <?php the_post_thumbnail('thumbnail'); ?>
    </div>
  <?php endif; ?>
  <?php the_excerpt(); ?>
</div><!-- .entry-summary -->

HTH

David

ah yes post thumbnails, thank you