listing more than 2 posts when a category is clicked on

I have a few categories set up within my menus, but when you click on them you only get the two most recent posts from the category. How can I expand this number to 5-7?

Also, is there a way to include a photo from the posts when the category brings up the first snippets?

Would love some help... but please speak easy as a I am a total newbie and still very much afraid of crashing my blog.

thanks in advance,
adriel