Image courtesy J Kyrnin
Padding Added
Adding some padding stretches out the space that is used by the element - the edge of the content is where the dotted line is, but as you can see, the background image is expanded to fill in the additional space. For the example, I used an image that was exactly the height and width of the content plus padding. So the image does not tile or clip. The CSS is:
width: 260px;
height: 260px;
background-image: url(bgimage.jpg);
padding: 20px;