If you have updated to the new Facebook timeline, you've probably noticed that there is now a big space across the top of your profile or page to put a very short and wide photo. This is a little awkward to deal with at first, because we've become accustomed to making our photos for our social networks either square or cropped to "profile" view (slightly taller than it is wide).
This one, however, is meant to be 850 pixels wide x 315 pixels tall - or it can be cropped to those dimensions after it's uploaded to Facebook. Basically, it's going to either be a panoramic photo, a collage, or a true "header" like you might have on an older-style personal blog.
If your page or profile is public, it needs to be appropriate for all audiences (i.e. keep it "G" rated), and you can only include "advertising" type material on a page (not on a personal profile). Pages are meant to be more for businesses or organizations or non-profits. The photos should not include any text that is meant to be hyperlinked, because at this time there is not a way to do that in the profile or page headers.
If you're looking for ideas, Honkiat.com (Part 1 and Part 2) has the best collection of timeline covers I've seen so far.
The important thing to remember is that this space is OPTIONAL. There's a lot to be said for the simplicity of just letting your profile image stand alone in this space (this will happen automatically), and leaving white space at the top of the page, like Tim and the gang at WebRev are doing right now. This strategy will achieve a much more professional look than just hastily sticking ANY old photo you can find in that space.
Also see Facebook Timeline - well done! and Why we can't just leave things alone.
If you want to atte,pt to design a Facebook Timeline cover for yourself, be sure to check out the resources in our Web Rev Photos archive, especially Open Source (Free) Graphic Art and Graphic Design Software, and Image Resolution Made Simple, as well as Merging Photos for your Wallpapers and Web Themes, and Three Quick (and Easy) ways to Hand-Tint Photos for your Wallpapers and Web Themes.