I usually recommend creating a child theme for something like this (protects your changes from theme upgrades.) If you’re not going to upgrade the theme then you can just hack away I suppose.
1) you’ll need to use the cropped version of the image found here
2) upload the image to the images folder within the theme
3) the following changes need to be made after the “Headers” comment in style.css
/* Headers */
h1, h1 a{
background: url(“images/logosmall.jpg”) no-repeat scroll 0 0 transparent;
height: 400px;
text-indent: -9999px;
margin: 0;
width: 420px;
display: block;
}
/*h1 a:link,
h1 a:visited{
color: #000;
}
h1 a:hover,
h1 a:active{
color: #000;
text-decoration: underline;
}*/
Should look like this: https://dl.dropbox.com/u/622475/Screenshots/newheader.png