I am creating my first wordpress blog and I really want to concentrate on good SEO. I want to use a JPEG pciture that I created in Photoshop as a website header. It includes the website title and description. Therefore I wont use <h1> or <h2> tags as a title. Is this bad for SEO?
Yes it is. One of the main objectives on SEO is to concentrate on "on page" optimization. That includes titles and therefore, hx tags. But can be fixed. The less images/flash you use on your site, the better, because bots will read your site easier (even though we have had an update regarding flash). Anyway, you can put some keywords with the image too. You can include the title as well by using one of the SEO WP plugins. So you shouldn't have any problem.
What is there to stop you doing both? You can have an h1 tag with a keyword rich strapline under your jpeg. Redefine the font attributes of h1 in your .css file to match your overall layout.
Yep I agree. Search Engine Spiders can't read images therefore it doesn't give them a description of what the given page is. Just make sure to use an H1 tag for your page/category name.