The Studio frame grabber can freeze and save the image in several popular formats (bmp, jpg), either from a camcorder or from captured video. You can then insert the stills into the project or save it as a file on your hard drive. Once on your hard drive you can manipulate it in any way you see fit. You can find more information in the Studio Manual or in the online help under "Still Image" and "Frame Grabber"
You can also import still images from other sources (Image editors, scanned pictures) into the Studio software and output them with your projects.
Studio is not capable of grabbing photographs stored on a memory card in a camcorder or from a digital still camera. A work around for this is to download the photo using a photo-capturing program, usually bundled with the camera. Then you can use Studio to import the still image file.
Note: If you do not have photo-capturing software, you'll want to contact the manufacturer of the camera for more info on acquiring one.