I recall the time when the entire net didn't HAVE images, so their use and how to handle them is a fairly recent affair. However, there are some fairly hard rules on what makes for good image management in the current day, on a business site in particular. With some exceptions :)

Time factors being the key

Your site images should load as quickly as possible, while still maintaining a reasonable view. What this means:

A: If you have a logo image, or header image that will be on every page, make it as simple as possible for colors and sizing.
B: If you have product images, make sure all the thumbnails are clear, and as close to the same size as possible, that load fast.
C: if you use enlargements, make sure they are clear enough to properly display the product, but not so large as force a longer load time than it really needs.

Sounds pretty simple right ? Well, it is, but it's not as hard and fast as it seems.
Exceptions to the rules:

Artwork for example, a case near and dear to me as an artist, tends to defy the rule of smaller and faster is better, as it IS art
and therefore to display it properly demands a certain amount of size and clarity. There is only so far you can take an art image down in size, before it loses clarity, and that clarity of detail is a must , if you want to sell the print or painting. However, this is one of the few exceptions.

There are others, but it all comes down to how much clarity and display size is "needed" to properly display the product.

Use them, almost everything needs an enlargement, even things you normally wouldn't consider needing them. Recall the reason for enlargements is not only product details, but to give the net viewer the one option they don't have on the net that they do in real life, which is pick it up and look at it, in detail. Enlargements of even small products, give them the net version of this ability.

Enlargements that are no larger than the thumbnail. Believe it or not I see this one, a lot and it will totally annoy your viewer.

Enlargements that are just a tiny hair bigger than the nail. This one is worse on the annoyance scale.

Enlargements that are too large. This is where you tread the fine line between what is large enough and detailed enough to display the product well, but is not so large as to become a hindrance for its load time.

Enlargement of the wrong product. This is a link problem in most cases.

And my favorite, an "enlargement" that is smaller than the thumbnail. Which is an easier mistake to make than one might think,
but needless to say it's really going to annoy your viewer.

While you can plaster a web page with 100s of images, it's not generally recommended.

But again, a great deal depends on the load time of all those images and what are they for

If there is a reason for lots, say a gallery or thumbnails of product images, then of course you need them, but keep them within reason for the type of page it is. A page of products for sale ? No more than 20 per page is a good general rule.
A gallery, like artwork, you can do more, its expected and excepted, but again keep the images small and quick to load.

Images that are not product:

Be extremely careful with "window" dressing images. Ones logo, fine, a header that they already loaded once from the front page ? No problem, as both of those will be quickly put up on the following pages as their browser has already downloaded them. Now, images that are solely for looks, be careful how you use them. Such images can, if they are related, serve well for certain pages as far a viewer appeal, as people "like" eye candy. However, do not get carried away with the idea, not on a business site at any rate. There is such a thing as too pretty, if it gets in the way of the sites functionally.

Example: Selling a service, you want an image that relates to that, as images tell more than words. However, you do NOT want images just for looks. If the image does not "sell" a service, you don't need or want the extra load time they will create. Of course again, for the look and feel there are exceptions, but keep such exceptions to a bare minimum.

Your images should enhance the viewers experience, not hinder it.