Click 'Online Designer Help' from inside the designer to access the latest info!***
The online designer allows you to upload JPEG, PNG or PDF images to a template and modify it without needing any additional layout software.
Your image will be converted to CMYK when your proof is generated. If you notice any odd color shifts in your proof, you may have to have someone with a program such as Photoshop edit the image for you.
The warning about your image not being 300 DPI can be a bit tricky- but if you see this warning and you know you have a good quality image, just proceed! If you find yourself having to scale the image down to fit the template quite a ways, the resolution should be fine (inversely, if the image comes into the template very small, there's a good chance that it is indeed low resolution).
Proceed with the rest of your design, and check your PDF proof files- those will let you know what you can expect on the final product.