post thumbnail

I want my blog template to have a layout where each post has an image that is posted alongside the excerpt. Much like this site.

I have tried the function the_post_image(); and the_post_thumbnail in my template but both give me this error:

Fatal error: Call to undefined function the_post_image() in [thethemedirectory]\blogpage.php on line 27

what am I doing wrong? This is the loop I made:

<?php query_posts('category_name=websites&posts_per_page=10'); ?>

  <?php while (have_posts()) : the_post(); ?>

		<div class="posthead">
			<h3><a href="<?php the_permalink(); ?>"><?php the_title(); ?>
			</a></h3>

		</div><!-- /Posthead -->
		<div class="entry">
		 <div class="alignright"><?php the_post_image(); ?></div>

			<?php the_excerpt(); ?></div><!-- /Entry -->

				<p class="postmetadata">
			<?php edit_post_link('Edit', '', ''); ?></p>

	<?php endwhile; ?>

I assume just adding an image to a post by uploading it and adding it as a thumbnail make it the post image. If I’m worng how do you add a post image to a post?