I'd say you're being dense.

Just select the picture, then use the SCALING tool. (it's about mid-way down the side tool bar. Looks like a swaure with other symbols around it).
Of course if you're using Illustrator 9.0 or higher, you should just turn on the bounding box. (Choose VIEW from the menu, and make sure it says "Show Bounding Box")
Now you sould have 6 little squares around anything you select. Just use those to pull and stretch your image as you need.