Images are a great way to get people engaged in your Web site. The human brain is hard-wired to find pictures more stimulating than text. And in fact, pictures of people, especially their faces, are even more stimulating than pictures of scenery.
But a Web page is more than just visually appreciating photographs, it is an interactive medium. And in most normal situations your average Web viewer isn't statically reading a page. They are constantly looking for something to click, something to take them on to the next big thing.
In fact, in studies that trace the clicks that a customer places on a page, images are a very popular place to click. (Which is why graphical ads tend to cost more than text ads.) So if your images aren't clickable, then those clicks won't help your customers.
Make Your Images Go Places
If you have images on your site, you should make them clickable. It helps if you tell people, in things like the title attribute or alt text, where the click will take them. But that isn't required, as most people know how to use the back button if they end up someplace unexpected.
This is true whether your image looks like a button or looks like a picture of your dog.
Use Your Images to Guide Your Readers
You can use your images to take your readers to the next stage in the process. For example, if you've got a multiple-page article, make your images take them to the next page. Even if the image is at the top of the page. This will tell them that the article has substance and they should keep reading. And there's always the back button if they're not done with the first page.
Images Have Power
People like to skim the Web and they like to look at pictures. If you make your pictures do something beyond just decorate your page, you'll be assisting your readers and making your site more interesting.