Create the image and then add the following to the CSS edit window, edit the height and width and put the height and width of the image into the #logo declarations. Upload your image to your media library, get the URL of that and replace URL OF LOGO between the double quotes in the background declaration in #logo with with the URL of you logo image.
#logo {
background: url("URL OF LOGO") no-repeat scroll 0 0 transparent;
height: 100px;
margin-bottom: 34px;
padding: 18px 0 0;
width: 350px;
}
#logo h1, #logo h2 {
display:none;
}`
You will have to add a "Home" link to your top navigation menu as the logo will not link back to the home page. There is a way to do this, but it is a little complex and most freak when the process is explained to them.