I just realized that not everyone knows how to install these custom images on their Kindle. So I thought it would only be fair to offer some help here. Grab the Kindle 2 hack file here. (NOTE: you'll need Winrar or 7zip to extract these files.) Copy the hacked update file to your Kindle's root directory (root directory is the first place you go when you open your Kindle in a file browser.) Use the correct file depending on your Kindle version.
update_screensaverhack-install-K2.bin" for K2 U.S.
update_screensaverhack-install-K2i.bin" for K2 International
update_screensaverhack-install-dx.bin" for Kindle DX U.S.
Note - I have K2 US and i have to use the K2i file so try that one first.
Now go into your System folder, it may be hidden. Click here to find out to display hidden folders.
Create a folder here called screen_saver. Put your images here.
Now disconnect your USB and on your Kindle press the Home button to make sure you are on the Home Screen. Press Menu then choose Settings. Once you are in the Settings menu press Menu again and choose Update Your Kindle. This will take a minute or so and when you Kindle comes back you'll have your new images installed. You can test this by pressing the Standby button on the top of the Kindle.