I am building a site where users would sign on and enter information in a form, i want to set it up so that they can upload pictures to the server and and submit those picures with the form. The idea is so another user can view the information entered and also look at the pictures the user uploaded. What is the process of uploading the pictures called? IS there an extension for this?

You are right. It is called uploading pictures, but most would call it just uploading files. Check the extension PureUpload on this site. I have used it for a while now and had no major problems, although I have not tried testing it to the max. There are other extensions and components depending on your platform. Check google.