it is the right size and under 3mb
Are you trying to add this on the New channel page or Old channel page?
You edit the new channel page itself. Go to the channel page, hover over the Admin button in the top center, and then click Edit from the drop-down. You can then insert the header graphic.
Ah, I misunderstood. On the new channel page, you can set a background picture. You still set your offline image and your “icon” from Settings; http://www.twitch.tv/settings
There is no other header graphic on the new channel page at this time.