Pictures can be made smaller to provide faster load times and to conserve server space. This tutorial will help you resize and save your pictures so they can be displayed on your website. The ideal size for web images is 480 x 360 or smaller at 150 dpi.
Because the images are being seen on a monitor (which doesn't have more than 100 dpi resolution) you won't be compromizing your visitor's experience by shrinking pictures down, you will actually be accelerating it. The only real reason to make a large image file available on the web is for print materials.
If you are going to be working with a lot of images it is worth the money to purchase Photoshop or Photoshop Elements (the much less expensive, in a nutshell version of Photoshop). These programs can process multiple files in a short amount of time. If you are only working with a few pictures at any given time, Microsoft Paint will work, but I would strongly recomend getting actual image editing software.