<notice, all pics are reduced quality to save space>
CLIFFS NOTES: Use wide wallpapers, not tall wallpapers. The wider your picture, the more height you can get on the wallpaper.
The problem is your picture is too tall. I, too, was getting pissed about how I could only pick the middle part. Follow along with my examples.
1. This is the original picture, 800px wide x 1200px tall, on my Evo, with the crop box showing I can only select half of Tiffany and that pic as my wallpaper.
2. I Photochopped the original picture by extending the width (copy/paste the edges) and now the picture is 1600px wide x 1200px tall. Here it is with the crop box now
3. Here they all are. The original (tall) one, the wider one and then an even wider one (2200px wide by 1200px tall).