I've used an app called Backrounds it works pretty good and its free. There are quite a few free and paid apps for backgrounds. If you see one you want to try give it a shot. The paid ones you have 24 hours to try and if you don't like it uninstall it and you get a refund.
I have one called "Backgrounds" and another called "Androlib Wallpapers" (I think) and they both have a decent selection, though sorting and searching could be made much more painless.
It's difficult for me to see myself showing off my Droid with a huge honkin' set of hoo-hoos as my wallpaper
I would say the best app is can be found in the Market its called "Zedge" it has Wallpapers and Ringtones and they're all free.
Hey, it just adds to the phone's appeal! What's going to catch my friends' eyes, the iPhone with boring iPhone background, or the Droid with in-your-face boobies on the home screen? I'm kidding, of course. I feel kind of inappropriate having tits all over my phone, since people regularly ask to see and/or use it.
