When you choose a picture to set as your wallpaper it then gives you the option to select what portion of the picture to use. You'll see some blue boxes with dots on the sides. You touch and drag the blue dots to make the blue boxes bigger or smaller. Whatever appears inside the boxes is what will be visible as your wallpaper. You'll notice there are two rectangles, one taller and one wider....these represent the way the wallpaper will appear in landscape and portrait modes on your phone.
If you notice that you can't make the selection large enough, that is because the dimensions of the picture aren't large enough for the system to fill both vertically and horizontally. If you have a portrait style picture you want to use and ONLY have it in portrait layout on your wallpaper, click on the "crop" button in the upper right (looks like an L and an upside down L crossing each other). Select "portrait crop" and the phone will only use the portrait layout.
Hope this helps.