Using an image texture:
Add an Image texture in the Texture Buttons and load the image (this is necessary also for UV mapped textures).
The button Col in the Map To Panel uses the RGB information of the image to change the color of the material.
The slide number button Col governs the blending amount of the texture, Neg inverts the colourvalues.
If you use No RGB only the intensity information from the picture is used. The target color is then taken from the RGB sliders in the Map To Panel.