Creative Commons gives authors a way to share their work for free while retaining ownership. They offer six different licenses, and all a creator needs to do is attach one to his or her work. CC licensed materials are great for music, photos, sound effects, and more. Using them correctly (i.e. following the rules of the licenses), they also give a way to avoid most copyright problems.
Please give credit when using Creative Commons material. The creators are letting you use their material for free, so it's the least you could do.
You can find Creative Commons Licensed pictures on a number of sites.
The easiest is Wikimedia Commons. Everything there is licensed for others to use, but check to make sure you can alter it.
Flickr also lets you search by Creative Commons license. First do a search, then click on "Advanced Search." Scroll down to the bottom and you'll see options for searching only Creative Commons content.
If you're looking for some great art, the Getty Museum has made its images available.