fading in, fading out images. (rollovers)

ok, i got a friend that i need to make his image into a site.. now i got some ?'s

he is using it for wallpapers, he wants the wallpapers part of the main image on its own layer, so that it is translucent then when you go over it, it will go to full color (no tranparency). do i have to do this as a gif and make it a rollover or something, do i need to make it a seperate image?

im new here, sorry if its wrong forum

thanks

:D

some examples:
http://www.deathtothepixels.com/ but so it fades in and out.
http://rainworld.com/psworkshop/ and that, but they dont seem to be working, lol

ok he says its like the last link exactly, any help please?

Maybe CSS might work for you
here`s a link

http://www.solardreamstudios.com/tutorials/css/opacity/

There's another tut for it at www.thedesigncore.com , he uses Javascript.