In addition to the responses that are already given and basically solve the problem I would like to share one minor useful thing. In the JournalArticle StyleSheet one finds the formats Figure and FigureCaption. If you use that style, you may use any of the methods described by Murray Eisenberg, or David Park,or simply mark the cell as the Figure cell and then plainly copy-paste your image into this cell. Then mark the next cell as the FigureCaption cell and type your text there.
The first advantage is that they will be automatically aligned.
The second, much more serious advantage is that you might want to have all the images automatically numbered and referenced. If you use this approach you can number the captions using the built-in Mathematica numbering method. If your documents are lengthily and you rewrite them several times, you have no troubles with renumbering all the figures and references to them, since the numeration automatically changes everywhere.
Of course, the JournalArticle StyleSheet has some disadvantages. For example, the text font is too small there to my taste. This, however, may be fixed by editing the StyleSheet.
Have fun, Alexei
I have been using notebooks to write reports for a while. Although I am getting by (the package Presentations by David Park has been of great help), I still have some points that I am not sure how to handle. Ok, here they are:
a) Insert-> Picture-> From file inserts the jpg as advertised however I did not figure out how to add a text box that works as a caption just below the figure in the same cell. Of course the cell cannot be evaluated, so I have turn off that option. If there is a way to add the caption, I wonder whether the whole cell - picture + caption - could be centered justified.
b) Style - Text - How to create a dynamic cell, that is, suppose I have a text cell as follows
After some calculation the value of the variable omega is 3.4.
Instead of 3.4, I wonder whether it could be the actual calculated value of omega. If omega changes I do not need to change the text cell to update its value.
One thing that I've noticed is that one has to keep the cell size to a minimum, otherwise lots of almost blank pages come out of the printer.