Jaguar adds the ability to rotate your desktop picture on a regular basis, even in as small as five second intervals. In the System Preferences -> Desktop panel, you can choose from any folder of graphics to place on the desktop. Unfortunately, the system won't drill down to folders lower than the top-level of the hierarchy, so if you point it to the Pictures folder, you'll only get the first level or photos.
iPhoto places photos in many different folders, so it's impossible to use all of your photos for desktop images. When you create a new iPhoto library, however, iPhoto then creates a folder for that library in your Pictures -> iPhoto Library -> Albums folder. This new folder contains aliases for all of the photos in that new Library. Simply point the Desktop Preferences toward one of these Library folders, and you're in desktop image heaven.
Mac OS X Hints
http://hints.macworld.com/article.php?story=20020830065302983