So, you want to change your Grub background or wallpaper?
First, find an image that is at least 640x480. Open the image in GIMP.
gimp grub_background.jpg
Now, resize the image to 640x480 if needed ( Image -> Scale Image... )

And then save the image as an XPM ( File -> Save As... ).

Be sure to save the file as an X PixMap image (.xpm).

Compress the file and place it on your /boot partition, inside the grub folder.
gzip grub_background.xpm
sudo cp grub_background.xpm.gz /boot/grub/
Finally, edit your /boot/grub/grub.conf and add or replace the splashimage entry with your custom background.
splashimage=(hd0,0)/grub/grub_background.xpm.gz
Reboot to test your changes. If the Grub background appears like television snow, check that the image size is exactly 640x480.